Summary
As the best of the multi-channel retailers continue to define customer base through assortments and niche marketing venues, Best Buy's strategy to allow customers within market to "pull" the local assortment based on needs and preferences vs a "push" methodology based on what a retailer thinks its customer base wants is a very strategic business model for the following reasons: 1)Assortments can be narrowed and thus, inventory cost/turns/ROI can all be positively impacted by carrying must have vs "cookie cut" assortment. 2)Greater focus can be placed on high demand, never out products which maximizes sales exposure and minimizes markdown risk. 3)Customer loyalty is continually enhanced through perpetual confidence of instock. 4)Best Buy continues to grow its brand and be viewed as a solution provider/consumer partner vs a goods and services destination as is the case with rival, Circuit City.
Analysis
As great companies often do, Best Buy has continually embraced change and provided differentiation by listenng to customers and store associates to tailor strategies that sustain growth and enrich the already rock-solid business model that distances it from Circuit City. Just two years ago, Best Buy recognized that 1/3 of customer visits did not translate into sales and set about to change and fiercely fight for being and remaining #1 in the CE market sector. Posing perhaps an even greater threat to the near and long term revenue and market share retention for Circuit City is the fact that best Buy readily admits that currently, they are only 2/3 of the way there with this consumer centric "pull" strategy that they hope to fully integrate and leverage over the next 18 months.
While the headlines coming out of Richmond, VA continue to speak of diminished sales, earnings and workforce cutbacks that tally to the tune of $110 million in operating costs as a means to stop the bleeding TY, the news out of Minneapolis, MN is that by focusing on all the things that sustain current and future growth in the perpetual quest of moving from good to great, at least one of the two largest CE chains is listening to the customer and building shareholder value!
