Happy-looking people were huddled around tables filled with the latest gadgets from Microsoft and Apple. The video game aisle was bustling. Blue-shirted employees were helping a customer pick from a glowing wall of flat-screen TVs. There was a line - a line! - at the checkout counter.
Many people, myself included, assumed that the entire big-box retail sector would eventually fall under Amazon's steamroller. I knew Best Buy had spent the past several years playing defense against Amazon, finding some initial success by cutting costs and reducing prices to match its online rivals.
But Best Buy's rebound has been surprisingly durable. Revenue figures have beaten Wall Street’s expectations in six of the last seven quarters. The company’s stock price has risen more than 50 percent in the past year. Workers are happy. And judging from several other visits I paid to Best Buy stores, the chain appears to have avoided the bleak fate of other big-box retailers. How do they do it? To find out, I called Hubert Joly, Best Buy’s chief executive.
An upbeat Frenchman who spent more than a decade at the consulting firm McKinsey & Company, Joly, 58, explained that Best Buy’s turnaround was years in the making, and that it involved reshaping nearly every piece of the business. It’s a fascinating playbook for companies hoping to survive in the Amazon age.
Here are the keys to Best Buy’s turnaround, according to Joly:
1. Price, price, price
When Joly took over in 2012, Best Buy was bleeding out. A former chief had resigned after admitting to an improper romantic relationship with an employee. The company’s systems were outdated and many stores were losing money. Many of the products that drew customers to stores, such as new CD and DVD releases, were becoming obsolete.
Timely, incisive articles delivered directly to your inbox.