How Best Buy is Beating the Odds

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Best Buy pickup at CVS, UPS

Best Buy reported today comparable store sales were up 1.6 percent with online sales up 22 percent, sending the stock soaring by 16 percent.

The increase is notable as analysts had expected a decline in sales. Also, it comes at a time when many other brick and mortar stores are struggling to lure shoppers into stores.

Mobile products and gaming were responsible for much of the sales increase, said Best Buy CEO Hubert Joly.  The delay in tax refunds this year also helped sales towards the end of the company’s fiscal first quarter ended April 29.

About a third of Best Buy’s online sales are picked up at one of its physical stores, as it sells large screen TVs, and large appliances. But also some of its smaller items are picked up at stores as well, reports MarketWatch, citing Fitch Ratings.

“Many customers don’t trust an expensive item to be shipped through home-delivery channels and left on the front porch or outside an apartment door,” it said.

The in-store pick up leads to the purchase of accessory items such as cases and cords. And in-store pick up is becoming popular with consumers, said JDA Software.

Business Insider quoted more than one analyst stating that Best Buy has figured out where the physical store makes sense in an increasingly online shopping experience.  And it’s learning how to compete with Amazon.

However Best Buy’s income for the recent quarter fell to $188 million from $229 million.   Total revenue inched up 1 percent to $8.53 billion.

Read more at BestBuy.com.

Source: CNBC, MarketWatch, BestBuy.com

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3 Comments

  1. They did not share the secret. The secret is because their site and their store no longer is priced 30-50% higher than Amazon. They are requiring (forcing due to their size) vendor relationships that require pricing allowance (compliance) by vendors whereby they will match and revise pricing. That, combined with exclusive opportunities, and their willingness to match prices = increase in revenue, decrease a bit in margin, and the decrease you see in net results. It’s not rocket science. No customer, including all you manufacturers reading this, want to pay 30-50% more than market price just because you “feel” your product is worth it. Once your product gets in the wild due to egregious distribution tactics, you need to face reality and let your authorized partners across the board compete. The resulting conclusion may be the same (the strong will survive), but at least the playing field will be equal. The playing field is not even relevant if you literally do not let someone compete to see if they are stronger.

    1. They’ve been pricematching Amazon for over 4-5 years now. Doesn’t that kinda punch holes in your argument to what they changed?

  2. This is awesome information! A Multi-Billion Dollar Company Sharing their Research!
    “Many customers don’t trust an expensive item to be shipped through home-delivery channels and left on the front porch or outside an apartment door,” it said.

    This is how I would capitalize on the above knowledge if I was you by asking a question if someone was to say to me,
    “If I buy it on-line, would you still put it in?”

    I would just ask,
    “You wouldn’t want to take a chance on it getting stolen if it was delivered to your home or apartment when you were away, would you?”
    Then Remain Silent!

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