Best Buy revamps old-school model
When Best Buy Co. trotted out its new rewards program last month, riffing on the word “my,” the name had a familiar ring.
“My Best Buy” sounds a lot like “My Macy's” from the Macy's Inc. department-store chain, “MyLowe's” from home-improvement retailer Lowe's Cos. and even Zoeller Co.'s “MyPlumbingStuff.”
Best Buy Chief Executive Officer Hubert Joly is borrowing that two-letter word and plenty more from rivals to improve the retailer's e-commerce operations, which even his own colleagues say had fallen a decade behind. While the website won't seriously vie with Amazon.com Inc. any time soon, Best Buy can harness its brand recognition and status as the largest consumer-electronics retailer to grab e-commerce share. The efforts may already be helping, with Best Buy's online traffic rising 9.9 percent in August from a year earlier, according to data from Compete.com that the company uses.
“They're the 800-pound gorilla,” David Strasser, an analyst at Janney Montgomery Scott LLC in New York who recommends buying the shares, said in an interview. “After struggling with no real Internet expertise, they've brought on a pretty strong team.”
Joly set about shoring up the physical stores after taking over as CEO about a year ago, cutting $390 million in annual costs and matching rivals' online prices to slow the decline in same-store sales.
The stabilization has helped restore investors' confidence in Richfield, Minn.-based Best Buy. The stock, which traded at an 86 percent discount to the Standard & Poor's 500 Index on a price-to-earnings basis in January, has tripled this year and closed at a 6.8 percent premium to the index today. The shares slipped 0.8 percent to $37.66 at the close in New York.
That rebound gives Joly, 54, some breathing room as he works to convert more of Best Buy's 1 billion annual online visitors into buyers. Slightly more than one of every 100 visitors makes a purchase, about half the average rate among retailers, according to UBS AG.
Joly has set a target of more than doubling Best Buy's share of U.S. online consumer-electronics sales to 18 percent — matching its share of brick-and-mortar sales — from the current 7 percent.
“There is no reason it should be lower,” Joly said in a telephone interview in August. Bringing BestBuy.com up to speed with competitors “is going to be a two- or three-year journey.”
About a month after becoming CEO, he hired Scott Durchslag from online travel company Expedia Inc. as president of Best Buy's global e-commerce operations.
A month later, Joly brought Sharon McCollam out of retirement to become Best Buy's chief financial officer and chief administrative officer. In similar roles at Williams- Sonoma Inc., she helped push online sales to 40 percent of total revenue. Now, Joly is hiring more than 100 Web architects, engineers and other technology workers.
The team is starting with the basics, adding more product reviews and buying guides to the website and enabling it to recommend additional purchases for shoppers as they check out.
Best Buy began testing shipping online orders from stores to customers' homes four months ago, catching up to Nordstrom Inc., which has filled online orders from stores since 2009.
“My Best Buy,” which has 41 million active members, lets shoppers redeem reward points and shop on a single site, bringing it up to speed with programs such as Dick's Sporting Goods Inc. and Panera Bread Co. Best Buy's previous loyalty program, “Reward Zone,” wasn't linked to BestBuy.com, forcing users to log onto both sites to turn points into purchases.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Large-scale batteries are integral in shift to renewable energy
- Plastics, tech sectors crucial to cracker plants
- Energy Spotlight: Steve Anthos
- Without pipelines, gas can’t get to demand
- Hackers rip into heart of open-source software
- Open enrollment puts varied impact of health care law back in focus
- Mortgage in reach despite few dings
- Student loan debt presents paradox
- Duquesne University business center helping Hispanic startups
- Universal theme park swings into Beijing
- 113 Federal Reserve staffers earn more than chief Yellen