While Best Buy saw its domestic revenue decline 2.4% in the second quarter, its online revenue increased 22%, or $581 million. Best Buy President and CEO Hubert Joly said during the Aug. 26 conference call to discuss second-quarter financial results that staying true to the company’s Renew Blue strategy is paying off.
“Like other retailers, and as reflected in this quarter’s performance, we continue to see a shift in consumer behavior,” Joly said. “Consumers are increasingly researching and buying online. As a result, traffic to our brick-and-mortar stores continues to decline and yet our in-store conversion and online traffic continue to increase due to the execution of our Renew Blue strategy, which is in direct alignment with this shift. Our Renew Blue strategy is designed to grow our online business, enhance our in-store customer experience, and leverage our multi-channel capabilities or deliver to our customers great advice, service, and convenience at competitive prices in the channel they want to be served. Each of these initiatives contributed to our second-quarter results.”
Joly explained that the company’s renewable transformation roadmap focuses on the following areas: Merchandising, marketing, online stores, Geek Squad, supply chain, cost structure, and employee engagement.
“We believe we’re raising the bar in our retail channel by continuing to roll out compelling and differentiated customer experiences across major categories such as appliances, home theater, and mobile,” he said.
Best Buy rolled out 800 Samsung and Sony Home theater stores within a store during the second quarter.
“This represents the first major merchandising transformation in Best Buy’s home theater department in almost 10 years,” Joly explained. “We believe that home theater transformation further solidifies our position as the destination for customers to discover and interact with industry-leading home theater technology, particularly ultra-high definition or 4k TVs, and we’re encouraged by the early consumer responses to our expanded ultra-high definition assortments.”
Best Buy began offering customers the option to purchase installment billing plans with the top three U.S. carriers in the second quarter.
“We made progress in our (marketing) evolution from analog in mass to digital and targeted communications with our customers,” Joly explained.
Best Buy continues to shift marketing investment dollars toward digital media campaigns and away from print and television advertising. The company has also leveraged its Athena customer database to pilot new targeted email campaigns.
“We’re in the early stages of being able to personalize marketing messages to individual customers, which we view as a two- or three-year journey,” Joly explained. “We do, however, expect to see gradual and incremental improvements in marketing effectiveness every quarter our customer insights improve and our new personalization capabilities are rolled out.”
For its online business, Best Buy continues to leverage shop from store, digital marketing, and enhanced website functionality−all of which helped drive a 22% increase in domestic comparable online sales.
“We also launched several customer-facing improvements on the website to drive increased engagements in a more seamless, online shopping experience,” Joly said.
Those improvements include: a new global home page that is easier for customers to navigate; significantly richer visual and editorial content for the ultra-high definition; and digital imaging in the health and wearables category.
“Looking ahead, our goal is to continue to create a differentiated multichannel customer experience such that every interaction customers have with us, regardless of channel, makes them a promoter of the Best Buy brand,” Joly said. “In support of this, we will be intensifying our investments in customer-facing initiatives across both channels in the back half of the year.”