Best Buy Vs E-Commerce Essay

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Total Length: 2555 words ( 9 double-spaced pages)

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Introduction

The target market for Best Buy is appliance and electronics consumers—people in the 18-35 year range, though the retailer does target older adults as well as “millennials” (ISU College of Business). Its main target is described as “highly engaged consumers who love technology” (WARC). In recent years, Best Buy has had to redefine itself and redefine its corporate strategy. In fact, it’s had to redefine everything—from its core products to its target market to its store concept. With the (foreseeable) rise of e-commerce, brick-and-mortar retailers have had to adapt or die—and many have died. Blockbuster, Toys ‘R’ Us, RadioShack are just a few of many that have fallen by the wayside. Best Buy appeared heading for a similar fate in 2012 when its share price hit a 21st century low for the company at $11.29. The company managed to bounce back in a big way (its stock currently trades at $61.98—and much of that bounce has to do with its ability to stay afloat in the digital era. Best Buy has rejuvenated its store concept, adopted the store-within-a-store strategy (Lee), and upped its interest in the tech-loving consumers who have helped propel retailers like Apple into the stratosphere.

Store Image

Best Buy’s store image has changed considerably since the company appeared locally here in the early 1990s. Throughout the 1990s, Best Buy offered some of the best deals on CDs, radios, movies, electronic equipment and computers. Then the Internet hit and suddenly e-commerce changed everything. Foot traffic into Best Buy dwindled and the store often seemed like a ghost town compared to the buzzing, busy, heady days of the 90s. Best Buy’s store image was revamped to be less product-centric and more consumer-centric. The store branded itself and its workers as experts in all things electronic. It developed its own Geek Squad to compete with Apple’s Genius Bar. Yet as far-reaching as Best Buy’s ambitions were, the merchandise it was selling could not quite match (and neither could its brick-and-mortar retail business model). The store had to push harder and drive window shopping foot traffic that still trickled in into sales. It adopted the Amazon model of ordering online and picking up at the store (Amazon warehouses and Amazon locker offered e-commerce shoppers the luxury of ordering online and picking up an Amazon location). Best Buy cut down on inventory costs and supply chain costs by minimizing the product it stored on-site. Accepting that purchasing traffic was going to be redirected to the Web in the Digital Age, Best Buy developed a new store image that was finally web-based. Its website became slick, sleek, simple, and easy to use. One-stop click and shop access, similar to what Amazon offers, helped boost the retailer’s image and show that it had what it took to compete for space in the consumer’s mind in the 21st century. If the local Best Buy did not have what you wanted in stock, the Best Buy online would have it and could have it delivered to your store quickly enough for the company not to lose a sale.

SCA

In terms of sustainable competitive advantage (SCA), Best Buy has relied on pricing and education to compete with and beat the e-commerce giant Amazon, which is pushing all other retailers to the ropes. Best Buy’s sustainable competitive advantage was always price, in fact. Giving consumers the lowest prices helped it win market share against other electronics retailers. Pricing gave Best Buy the edge of Circuit City and Media Play. But now it has had to reshape its SCA and adapt it for a new era. In adapting, it asked itself what products were people least likely to buy online—and the answer was large ones—appliances like televisions, dishwashers, ovens and refrigerators. TVs and appliances were the products that Best Buy could focus on to ensure the brick-and-mortar store still had a reason for existing (Plastow).

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That worked for a while but as time passed (2012 was a hard year for the company with the economy trying to recover from the 2008 global economic crisis and prices still down thanks to the rise of discount retailers), Best Buy had to do more. It had develop another SCA: and this time it turned to education (Shapiro). That SCA is rooted in the following factors:

· Training store staff to become product experts

· Beefing up the capabilities of the Geek Squad army of specialists

· Ramping up smart home offerings, along with services to help customers with installations (Shapiro).

There is also the SCA that has developed regarding Web presence. Best Buy has upped its online presence in order to keep shoppers from heading to Amazon for its buying purposes. Indeed, Best Buy’s website is clean and organized, advertises sales in meaningful ways, is intuitive to use for the shopper (unlike the brick-and-mortar store which can actually be quite confusing with its store-within-store concept), and can give Amazon some online competition. In terms of the local brick-and-mortar store, however, the SCA that Best Buy has implemented is one based on being smart and providing consumers with everything they need to know to make a good purchase.

Indeed, when a consumer enters Best Buy today, the consumer is met by a sales agent who puts the customer into a queue. The sales agent assumes you are there to buy—and even if you are intending just to see a model up close and in person before you go home to purchase it online, the sales agent does not want you to get away that easily. They want you stick around, learn about the different devices and appliances you are browsing and quite possibly even get you to purchase it in store while you are there. They use their new store concept coupled with an aggressive sales and education approach to drive sales and keep costs down.

Customer service is the new underlying SCA that Best Buy is relying upon to stay in the retail business. If products and low prices helped secure it a spot among the top retailers in the nation prior to the dotcom bust, today’s e-commerce heavy environment is lacking not in low prices but rather in human contact. Best Buy has picked up on this lack and is providing consumers with a real-world place where they can get a real-world experience with a real-world expert on all things electronics.

5 Retail Mix Considerations

Spatial Considerations

Best Buy’s spatial considerations are good. The high ceilings and the sectioned off departments all help shoppers to feel like they have a lot of room to maneuver as they browse the store. Signs help to advertise the direction of certain items, and smaller stalls in specific areas offer specialty items and products that are monitored by specialty associates who know all there is to know about that type of product. The problem with entering Best Buy today is not the spatial considerations, but rather the wait-time involved in getting to see an associate who is interested in helping you make a decision about which product to purchase. The queue is typically a few minutes long and an impatient shopper used to getting information right now from the Web may not feel like spending that many minutes simply browsing the aisles of a small section….....

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