Kagan: How Best Buy transformed itself for success
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The pressure has been on the traditional retail space for the last two decades. This has put countless companies out of business. At the very least every retailer needs to rethink their strategy. Best Buy has not only defied the odds, but over the years has completely transformed their model and it is working.
After facing new competitive pressure from many online services, like Amazon, and seeing their top competitors like Circuit City and HH Gregg close, the retailers has not only dodged the bullet, but is growing in what is becoming an exciting new space.
Best Buy is succeeding. They are becoming an attraction. They bring in customers who just want to walk around and see what's new. They are becoming a destination. Everyone reads about new technology, but you can't touch it online as you an in a retail store. That's one segment that Best Buy is targeting.
Best Buy should open Starbucks in their stores
What's next? They should open a Starbucks coffee shop inside the store to let customers wonder, enlighten themselves while sipping on their favorite beverage. This is changing the shopping experience. Creating a place where customers want to visit and stroll.
Best Buy is recreating retail. Recreating the experience in their stores.Different brand name manufacturers have their own island in the larger retail store footprint. Walk in and you will see Apple, Microsoft, Samsung islands and many others in every space including smartphones, computers, television sets, washers and dryers, refrigerators, stoves and kitchen equipment and mor.
This is great on all three segments. Customers love it. Best Buy loves it. Other brands with islands in the stores also love it. They are in a store where their customers, and their competitor's customers are shopping.
This is the kind of reinvention retail leaders need to pursue. Think about the retail experience over the decades. Stores used to be big and plain. Today, stores are becoming a destination.
Other companies are also transforming the retail space. Think about the Apple store. The AT&T store. There are countless stores that are reinventing retail. Stores like Microsoft, Amazon.com and more. In fact, I expect this trend to continue. There are many other creative ideas that can reinvent retail.
I remember when Best Buy executives first brought me in at the beginning of this industry wide transformation in the 1990s. Our conversations were about the coming threats to the traditional retail environment — how Amazon and other online services would continue to grow and how that would force many competitors out of business.
We have seen this in industry after industry, starting with the bookselling sector. Barnes & Noble is still around, but Borders and many others have failed.
This is the threat Best Buy faced. They tried many different ways to remain relevant in the marketplace over the last few decades. Their competitors failed. Customers' expectations changed.
Then several years ago they decided to focus on creating a retail island where other major brands can lease space. This was a great idea. An idea that catapulted Best Buy in the minds of the marketplace. Their stores are now a destination.
Today, this model is an enjoyable shopping experience. Customers enjoy visiting their tech amusement park. It's almost like going to a mini Consumer Electronics Show in Las Vegas every January.
Every retailer faces many of the same threats
Every retailer faces the same threat from online and retail competitors. Every retailer needs to rethink how they will reach out to the marketplace. How to create an attractive environment that the online giants simply can't do.
Someone will. If it's not you, then it will be your competitor. The leader sets the rules the rest of the industry must follow if they want to continue to be competitive. This is where retailers must be creative. They must not be afraid to push the envelope. To make changes which go against what they have learned over the years.
Traditional retail is threatened and must change in order to stay interesting. It has been threatened since Amazon.com was created in the 1990s. Actually, retail has been threatened for decades before that as well.
Retail must give the customer unique benefits like seeing and touching things that would only be on a computer screen. They can create a warm and open shopping space which gives customers a unique way to see and compare competing items.
They have made lots of progress. This is great, however Best Buy still has more change to come if they want to continue to be a leader in their space.
They need to continue to create new ways for customers to want to visit. Not just a store to buy what they need, but a place to walk around and sip a Starbucks and let their minds wonder with all the amazing new technology which we all hear about. All the new things they don't yet know they need. That's the magic of Best Buy and of the transformation in retail.
Companies: Best Buy
Jeff KAGAN Jeff Kagan is a Wireless Analyst, Telecom Analyst, speaker, author and consultant. Over 30 years he has followed the Customer Experience through technology like wireless, wire line, telecom, Internet, cable TV, IPTV, Cloud, AI, Mobile Pay, FinTech and more. Email him at jeff@jeffKAGAN.com. www