Mehmet TekinFei Yan

Gianna PassarelliJacqueline Sanita

Taylor Tobey

Best Buy Renew Strategy

SYPT2 Consulting Group

Agenda

History1

Issue2

SWOT3

Alternatives4

Recommendations5

Implementations6

Conclusion7

Q&A8

• 1966 Dick Schulze & a business partner opened Sound of Music sold hi-fi audio products and service

• 1981 Service Discounted name brands• Ventured into Superstores – Became Best Buy to go with

new strategic direction• Concept I: Superstore, low prices• Concept II: Grab and Go format• Concept III: Wider range of products• Concept IV: Customer Centricity

History

Financial DataSales & Operating Profit

20022004

20062008

20102012

0

500

1,000

1,500

2,000

2,500

Year

Ope

ratin

g Pr

ofit (

$ m

illio

n)

20022004

20062008

20102012

0

10,000

20,000

30,000

40,000

50,000

60,000

Year

Sale

s ($

mill

ion)

How can Best Buy strategically move forward as it faces tough competition, changing consumer markets, internal conflict, and growth struggles?

Sub-issues:Want to be go-to for consumer

technologyShowroomingOnline vs. brick and mortarCost control

Issue

Core CompetencesInternal Factors

• Great Leadership• Market Research

Ability to Reinvent

• Win-in-the home• Exceptional

Service

Customer Centricity

• DIVERSIFIED PRODUCT CATEGORIESTV&Home theater, Computer&Tablets,

Mobile, Camera, Audio, Car electronics, Home&Office, Entertainments

Discovering more• MANY HELPFUL ACQUISITIONS

Geek Squad Magnolia Future Stores

• BESTBUY.COM Large pool of potential customers

Internal Factors – Strengths

SWOT ANALYSIS

Internal Factors – Weaknesses

SWOT ANALYSIS

Lose control due to over diversification

Loss of CEO – Brain DunnLoss of knowledge with

Dick Schelze leaving the board

OUT OF CONTROL

Slow growth – 0.9%Operating profit down –

54%Net income – -$1.2 billionStock price halved – $24.7Lost 55% market

capitalization

POOR FINANCIAL PERFORMANCES

21

3

WEAK INTERNATIONAL PERFORMANCES

Closing flagship stores in China

Closing recently opened outlets in Turkey and the UK

External Factors – Opportunities

SWOT ANALYSIS

1 Online Store

Small Businesses

3

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2

Mobile/Tablet Trend4

Downsizing Space

External Factors – Threats

SWOT ANALYSIS

3

Online retailersDiscounters

Geek Squad Imitators1

Competitions

Circuit City Walmart

2

Customers using Best Buy as a showroom and information center

4

Showrooming

Rapid Change in Consumer Behavior

Targeting Staples

Cellphone service providers

Growth in personal electronic goods sector

Alternatives

• Pros: Expanded customer reach & visibility

• Cons: Strict competition: Amazon, eBay

• Pros: affordable & lower days in inventory

• Cons: risk, product damage

• Pros: Impulse buys, travelers, added revenue

• Cons: Return policy & profitability

• Pros: Rental income & brand promotion

• Cons: Risk, entire concept change Electronic

Mall

Accessory Vending

Machines

Online Platform

Expansion

Renting of

Products

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2. This is an example text. Go ahead and replace it with your own text.

3. This is an example text. Go ahead and replace it with your own text.

RecommendationsInternal & External Strategy

• Digital Marketing• Website

Enhancement• Postmates Venture• Mobile Application

Customer Engagement

Customer Outreach

• In-Store Kiosks• Geek Squad Service• Technology

Incubators

Social Media Facebook & Twitter

Promotions & campaigns Service touch point

Sentiment Analysis Monitor and manage Best Buy’s social

media outlets

Digital Marketing

Enhance current website Make more user friendly Better search and comparison

features

Recommendations: Part 1External Customer Outreach

Recommendations: Part 1

Redesign Best Buy mobile application Alert system for coupons when shoppers in store QR code scanner Click-to-buy Connect to Best Buy mobile website

Mobile Applications

Partnership with Postmates (mobile appliction) Revolutionary, same-day, urban delivery platform Ship any product within a city in under 1 hour Cross promote Best Buy with Postmates

External Customer Outreach

Your own sub headline

Your own sub headline

Recommendation: Part 1Implementation: Mobile Application

• Founded in 2005 in Minneapolis, MN by Dan West

• 12-15 employees• Specialize in enterprise app

development and web design & development

• Past clients: 3M, General Mills, PepsiCo, Nike, Target

• Cost: $100/hr; start process ASAP

Hire Westwerk for mobile app

& website development

Recommendation: Part 1Implementation: Social Media Outreach

• Execute campaigns across multiple networks from 1 web-based dashboard

• Incorporate comprehensive social analytics

• Can be used and integrated across corporate HQ and potentially locally

• Cost: $1500/month; start process ASAP

Buy HootSuite Enterprise Plan for social media

management

Recommendation: Part 1Implementation: Postmates Venture

• Leverage Brick and Mortar• Increased inventory turnover rate• Reach out & foster relationship• Partner to cross promote on

company websites & social media sites

Postmates Partnership

How to engage customers while

they’re in the store?

Recommendation: Part 2Internal Customer Engagement

Expanded Geek Squad

Technology Incubators

In-Store Kiosks

Internal Customer Engagement: In-Store KiosksRecommendation: Part 2

Self-Checkout

Compare & Use Products

Install Kiosks

Initial Investment:Zivelo: $2,500/kiosk2 per store = $5K/store1000 stores = $5M

investment

Cost

85% of customers would rather shop at store with a self-service option

Internal Customer Engagement: Geek SquadRecommendation: Part 2

Promote Small Business

Subscription

In-Store Training Classes

Expand Geek Squad Cost

Nominal fee on product for training class ($10 per $100 spent)

Extend to non-BB sales

Rent revenue varies; typical cost = $1-2K

per month

Best Buy receives rent revenue

Start-Ups use empty floor space as

incubator

Tech events draw enthusiasts &

customers

Product showings

Improved customer engagement &

presence in store

Internal Customer Engagement: Technology IncubatorRecommendation: Part 2

Annual Added Costs/RevenueFinancials

Cost/Revenue Projection

Kiosk Investment ($5,000,000)

Marketing Costs Westwerk & Hootsuite ($28,000)

Incubator Rent Revenue($36K/yr * 1000 stores) $24,000,000

Revenue from marketing, GS, & Trade Shows $500M - $800M

Added Profit: $519M-819M

ConclusionStrategic Decision

Changing Industry

Digital Outreach

Store-front Engagement

Best BuyBest Buy

Innovation

Success

THANK YOUQuestions?