After two long years of being in the duldrums Best Buy finally posted its best quarterly revenues, boding well for a turnaround which has long been in the making.
Best Buy, along with other “big box” retailers, have been facing fierce competition from the Internet, the place consumers have been turning to more and more for appliances and other electronic gadgetry.
Observers and investors were wondering whether the shift in venues was a permanent change. The fact that Best Buy seems to be making a comeback implies that retailers still have some clout with consumers.
The improvement can be attributed to the work of Chief Executive Officer Hubert Joly, who took over leadership at Best Buy one year ago. Known a s corporate turnaround specialist, Joly was brought aboard to specifically address Best Buys many problems.
High on the list of trouble spots were BB’s high prices. At the center of the issue is the phenomenon known as “show rooming” where potential buyers come into a store to view the product, but buy it somewhere else at a considerably lower price. Internet sites such as Amazon, which have very little overhead, can easily sell the same items for less money.
Joly instituted a price matching program, promising to match the prices of 19 on-line competitors and also local stores. Best Buy will also rebate money if the store lowers its price within 15 days of purchase. Joly wants to “eliminate price as an obstacle to buying.”
But he is not trying to undercut the competition either.
“We love the traffic on our site, in our stores, and we don’t want to lose a customer because of price. But we don’t feel that we need to be lower than (the) competition,” he said. “We just don’t want to be beat.”