Best Buy Talks AI Impact

Best Buy CEO Corie Barry presented the retailer’s views on the impact of Artificial Intelligence on electronics, during a call Tuesday with analysts.

Essentially AI is expected to lead to a greater need for computing power and computer upgrading. “I think obviously you are going to have likely at some point a different generation of technology that will more intensively leverage the capability to run these AI models. “

She said Best Buy’s suppliers are already working on bringing AI to their products. “We know our partners are working to create consumer products with generative AI.”

And Best Buy said that AI is already in use it its virtual chat with customers.  Virtual agents are now answering 40 percent of customer questions in chat without a human agent and with high satisfaction, said Barry.

In other initiatives, Best Buy is expanding Geek Squad to work with corporations to oversee providing their employees with laptops and phones.   Geek Squad handles distribution, maintenance and return of the devices.  It is working with companies such as Accenture and Lenovo.

Best Buy is closing 20  to 30 stores and undergoing 8 large format “Experience store” remodels and expanding outlet stores from around 19 to 25.

It is implementing new end-cap product demonstrations where the consumer then scans a code to order inventory that is located elsewhere and becomes available within minutes.  The system allows vendors a demo of their products and prevents shrinkage. This is important as certain parts of the country are seeing more “grab and run” thefts, said Barry.

Best Buy is also reducing the floor space for gaming and digital imaging to allow for growing categories including PC gaming, power tools, health tools like the Oura ring, Epson projectors and eBikes and scooters.

Best Buy also reported on the quarter ended July 29 with comparable store sales down 6.2 percent. Total revenue fell to $9.6 billion compared to $10.3 billion for the quarter last year.  Domestic revenue fell 7 percent to $8.9 billion due to a sales decline of 6.3 percent.

Domestic online revenue fell to $2.8 billion, down 7 percent, while remaining at 31 percent of domestic revenue.

Regarding the holidays, Barry said Best Buy’s hypothesis is that consumers will return to pre-pandemic behavior, looking for deals and responding to promotional events.

Barry continues to believe that 2023 will be the low point for tech demand before sales start bouncing back.

“Next year the consumer electronics industry should see stabilization and possibly growth driven by the natural upgrade and replacement cycles and the normalization of tech innovation,” she said in a press announcement.