The in-store retail experience has been in decline for quite a while.
9,300 brick and mortar stores closed in 2019, and 12,000 stores closed in 2020.
But while Amazon (AMZN) – Get Amazon.com, Inc. Report and other e-commerce stores, which can offer lower prices because they don’t have to pay for real estate, have significantly cut into the margins of department stores and big box retailers, some brands have found ways to reinvent and stay afloat.
In 2012, Best Buy (BBY) – Get Best Buy Co., Inc. Report seemed on the verge of irrelevance, or “dying a slow death,” per the Inc., with corporate scandals, low morale and increasing competition threatening to put the company out of business.
But the company was able to rebound thanks to a shift in corporate strategy. New CEO Hubert Joly began refocusing on employee training to boost morale and improve the customer service.
Joly also took note that Best Buy had become a place where people would visit, test out a product only to purchase it for a lower price on Amazon. So Best Buy instituted a price matching system so people would purchase then and there, which led to an increase in sales.
The company also began charging companies such as Apple to “showroom” their products in a branded space, which also boosted revenue.
These measures and more allowed the company to avoid the so-called “retail apocalypse.” Now, it has plans to expand its physical footprint.
What Does Best Buy Have Planned?
Best Buy has announced plans to open four new outlet stores that will offer clearance and open-box (i.e., items that have been returned but are still in working order) at reduced prices.
The store plans to offer discounted laptops, tablets, gaming products, mobile phones from name brands, and the Geek Squad will be on hand to assist customers.
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The stores will open in Chicago, Phoenix and Manassas, Virginia, and they will be remodels of existing Best Buys, while a Houston outlet will move to a location that is three times bigger than its current store.
The company currently has 16 outlet stores, and plans to double that over time.
In order to compete with the ease of Amazon, Best Buy has developed a program where you can select an item off of its website and then pick it up that day at a physical location.
Best Buy will be taking that program further, as customers can see what products are available at their local outlet store, and at what price, at BestBuy.com/Outlet. They can then pick the discounted item up at the store or curbside.
Customers can also opt to have small items such as laptops or tablets mailed directly to them. You can also opt for same-day delivery through third-party delivery partners such as including Dolly and Bungii.
You can also opt to have a product you purchase on Best Buy’s website sent to an outlet store, if that’s easier for you to pick up.
What Are Experts Saying About Best Buy’s Move?
The experts commenting on Retail Wire think this is a smart strategy on Best Buy’s behalf.
“Outlet stores in consumer electronics make nothing but sense. Best Buy outlets will allow the retailer to offload last-generation gadgets that would otherwise languish in its mainline stores (or landfills),” says Carol Spieckerman President of Spieckerman Retail. “Best Buy’s promises to offer high levels of service and same-day delivery for its outlet stores will keep the overall brand strong.”
“The Best Buy outlet model is a clever way to transform underperforming stores and utilize the space for discontinued, discounted and opened box items,” says David Naumann, Marketing Strategy Lead – Retail, Travel & Distribution, Verizon. “The challenge will be merchandising products that have a quantity of one and keeping the shelves full and tidy. It will be interesting to see how these stores perform.”
“The outlet model has worked for many retailers. For Best Buy, this is a good way to move merchandise that didn’t sell in their main stores. Computers and other electronics can’t sit on a shelf for two years,” says Shep Hyken Chief Amazement Officer, Shepard Presentations, LLC. “They go out of date as updates improve the technology. (By they way, it’s the same for fashion.) Same for “open box” items. The stores don’t want a reputation for selling outdated merchandise, so the outlet store, where Best Buy can promote ‘last year’s model’, makes good sense.”