Reinventing Best Buy - Case Solution

Reinventing Best Buy – Case Solution

This Reinventing Best Buy case study tackles how the company was able to make a turnaround despite the competition in the market, specifically with Amazon.com’s practices.

Best Buy Company, Inc. is the largest retailer of appliances and consumer electronics in North America. From 2010 to 2013, the company experienced declining store sales.

This was mostly attributed to Amazon.com’s showrooming practices. Amazon directs customers to look at products from any physical stores, including Best Buy, but customers are encouraged to buy them at lower prices online.

CEO Hubert Joly grabbed Amazon’s strategy by coming up with competitive prices. As a result, a turnaround was experienced.

Over time, CEO Joly concluded the “Renew Blue” program and is now planning on the creation of “New Blue” in the hope of curtailing Amazon’s advances.

What were the strategic challenges facing Best Buy in 2012? Why was the

company finding them hard to respond to?

The strategic proposition of Best Buy was to become one of the largest retailers of consumer electronics and appliances. The company seeks to improve the incapacity of managing its international business.

However, broad-based discounters like Walmart are growing. At the same time, companies with online sales business models, like Amazon, are scaling high.

With these competitors, Best Buy experienced an overall decline in its market share. This is one of the major challenges that this company faces.

Furthermore, Best Buy’s Marketplace program failed to capture an adequate share of online sales. The intense market competition of other platforms like Amazon.com and Buy.com allows customers to compare Best Buy’s store prices with their own products. This contributed to the failure of Best Buy’s program.

Nevertheless, the company struggled to face this new challenge. Added to this, however, are other internal management problems.

Best Buy management fails to do what they said they would do. Low customer satisfaction and poor price perception also contributed to the challenges.

During the 2007 and 2009 recession, the company continued to open new stores, which negatively affected the company.

Moreover, the company couldn’t adapt to other companies’ online business services due to inconveniences like offering the best experience for the customer or failure to deliver all the information about the electronic products they were selling.

What did Joly see as Best Buy’s key strengths and weaknesses? Do you

think his assessment was accurate?

Best Buy’s key strengths were strongly related to the leadership they had within the North American market, allowing them to continue their growth in the most important categories.

The company had a considerably large customer base, with millions of consumers belonging to the loyalty program. This was achieved thanks to the “unique and compelling” selling proposition (pg. 4) used as a strategy by the company.

This consisted mainly of a good advising service, competitive prices in a wide list of categories and products, support, and multi-channel service, all of which were framed in a productive model directed to increase sales and productivity.

The key weakness that Joly saw in Best Buy was…