Best Buy is a consumer electronics corporation that began in 1966 as an audio specialty store. In 1983 there was more emphasis on consumer electronics and eventually Best Buy became the largest national retailer of electronics and computers in the United States. In 2008 their competitor Circuit City filed for bankruptcy. Despite Circuit City going out of business Best Buy was gradually losing market share largely because of a lack of sales from 3D T.V.’s and Apple creating their own stores. The struggles for Best Buy continued when their competitors would slash prices on electronics and potential customers “showrooming.” Shoppers are known for going to Best Buy to test new electronics and then purchasing the same items online at a discount. What made matters worse was the sale of electronics in general has a low buying power. Electronics are known as luxury items and customers can always hold off on purchases because it is not a necessity such as food, water, and shelter. For not changing quickly enough on their market strategy, Best Buy’s quarterly profits plunged over the years. There have been thoughts by many that Best Buy would go out of business like Circuit City.
What makes Best Buy a turnaround story is that management eventually understood changes had to be made. Over the years, they carefully implemented many new and successful strategies that are paying off. Best Buy truly understood who they were as a company. They reduced prices on many electronics to compete with Target and Walmart but avoided a pricing war with them because it’s a losing battle. Bust Buy cut prices to remain relevant. To stand out they implemented “space optimization” by replacing outdated merchandise with products that can sell. Samsung experience shop was also a new strategy to give customers advice regarding their mobile products and their geek squad provided repair maintenance for any tech issues. The in-store strategies have been working because domestic comparable sales increased by 2.4%. Their third quarter results were impressive. It beat analyst expectations with EPS at $0.32 and total revenue growth of $9.38 billion. More investment from suppliers are present and performance may improve even further because of the holiday season. Best Buy indeed turned their fortunes around and now the question remains can they keep this up?