The names of retail businesses that have failed in the Age of Amazon are too numerous to list. Just this year alone, more than 3800 brick and mortar businesses have closed, including all 735 Toys R Us locations. The wave of closures has prompted many to declare this period one of “retail apocalypse”; however, one brand renders this proclamation inaccurate. I ask you all to consider the curious case of Best Buy, a brand that has, against all predictions, managed to flourish in the Amazon Era.
Last month, Best Buy reported “a better-than-expected second-quarter profit, driven by a 6% increase in comparable-store sales in the U.S., Best Buy’s top market, representing well more than 90% of its $9.4 billion in fiscal Q2 sales.” Furthermore, the store claimed that “customer visits to stores and online had increased, as had its conversion rate, referring to those visiting online or in stores who made a purchase.” Finally, and perhaps most impressively, Best Buy announced that it gained market share across all categories. Their continued growth has not happened by accident.
Over the last decade, the huge success of Amazon has forced many brands to reevaluate their retail models and marketing strategies—and if they haven’t already, they better. Amazon’s key to success? Putting the customer first, which to them means way more than claiming to be some tech digital giant, and clearly revolves around innovating ways to make their customers’ lives more convenient. Best Buy’s period of reckoning came in 2012 when they acknowledged their struggle “to grow revenue and profits were not just temporary ‘headwinds’, but a permanent shift in the consumer electronics retail business.” They correctly concluded that an overhaul was in order so as not to join the graveyard of dead retail brands.
That year, Best Buy launched an effort called “Renew Blue,” which outlined five goals to transform their customer experience. Some of these goals included, “[attracting] transformational leaders” and “[working] with vendors to innovate and drive value.” Additionally, rather than opt for the knee-jerk total divesting strategy, Best Buy chose to leverage the brand’s greatest differentiation from Amazon—their enormous brick and mortar presence—to their advantage.
To begin with, Best Buy invested more time in employee training and initiated a policy of in-store price matching to encourage increased in-store sales. Best Buy’s insight was that most buyers typically research electronic products online but like to look at the items in person, driving the company to create a digital strategy that worked in conjunction with Best Buy’s in-store experience. Showcasing and selling products in a physical space gives Best Buy their biggest advantage over Amazon. Think about it. Best Buy delivers instantaneously—in real time. When the customer has a gadget in their hands and wants to buy it, there it is.
Amazon offers Prime, Prime Now in some cities, and has also launched physical stores (I’m a huge fan of their bookstores in New York) with more to come. And, while Amazon has enabled humans to become smarter shoppers, Jeff Bezos also understands that humans will never be entirely satisfied with shopping devoid of real experience. The success of Best Buy proves that human spontaneity and the desire for instant gratification are still competitive advantages. So-called online retailers such as Everlane, Warby Parker, Away, and Casper have begun understanding this as well, and now operate physical stores to accommodate their shoppers’ need to touch, feel, and experience the products they hope to purchase. Listen:
“The challenge of the retail business is the human condition” – Howard Schultz
The most successful retailers have always tried to innovate for their consumers, rather than for themselves. In my view, Amazon is here to stay because they get this better than anyone (if in doubt, check out this exciting news, published today), and Best Buy and others like them have learned from Amazon. Brick and mortar, digital—makes no difference. It’s all about people.
What do you think?