The chief executive of Best Buy Co Inc Hubert Joly says that his company is ready to show that the U.S. retail is not a “winner takes all” situation and for this the company is ready to compete with the market leader Amazon Inc. as it has now managed to complete its turnaround that took five years.
The decline of the mal culture in America and the stiff competition posed by the online retail segment in the last few years has seen the closure of a number of brick and mortar chains in the country even as those like Best Buy have had to close down a number of their stores.
Joly said in an interview to the media that customers are again getting attracted to the largest U.S. consumer electronics retailer.
“We have turned around the business, it’s about where we go from here,” he said. “We have not only survived but thrived and I don’t believe this is a winner-takes-all market.”
Best Buy has been attempting to attract more customers to its physical stores as well as to its website through a number of measures that includes better customer service, enhancing the search function on its online portal, faster delivery and price matching. These have been quietly done by the Richfield, Minnesota-based retailer over the last five years. During the last quarter for the holiday season, the rebounding U.S. economy, and strong confidence of the consumer on spending helped Best Buy to post its best sales in a decade and its sales were far above what had been projected by Wall Street.
There has uptick of 271 per cent in the share price of the company in the last five years. On Friday, the closing price was $73.82. during that same period, there was rise of only 72 per cent in the S&P.
Joly said that the tumbling sales at Sears Holdings Corp and the bankruptcy of rivals RadioShack and HH Gregg Inc helped Best Buy to benefit in the sale of appliance and home theater business.
About 15 per cent of the total market for consumer electronics is dominated by Best Buy. He further said that there is much scope for growth in the market because only about 25 per cent of the market is shared between Best Buy and Amazon.
The company is set to offer technical support to shoppers for its electrical appliances under its new services program that is called In-Home Advisor and Total Tech Support and this is one of the bets of the company to do well. And to ensure speedy delivery of its products, the retailers is also set to open new warehouses close to urban markets.
The turnover rate of employees of the company has also seen an improvement with a current turnover rate of 30 per cent from a previous 50 percent before the turnaround because of investments made in employee pay and training and other initiatives.
(Adapted from Reuters.com)