Best Buy: Downsizing to Remain Competitive

            

Details


Case Code : CLBS123
Publication date : 2012
Subject : Business Strategy
Industry :Electronics Retail
Length : 03 Pages

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Abstract: ICMR India ICMR India ICMR India ICMR India RSS Feed

This caselet analyzes the reasons behind the largest US-based electronics retailer Best Buy's decision to close down 50 of its big-box stores. It also discusses the competition to brick-and-mortar retailers from online retailers and explains the restructuring plans of Best Buy.

Issues:

The changing retail trends and growing preference for shopping online.
The effects of recession on big-box retailers and superstores.
The importance of customer service.

Introduction

On March 29, 2012, one of the largest electronic retailers in the US, Best Buy Co., Inc. (Best Buy) , announced the closure of 50 of its big-box stores . It also announced the launch of 100 new 'Best Buy Mobile' standalone stores and the remodeling of some of its big-box stores into Connected Stores, to provide personalized high-end service. Brian J. Dunn, former CEO of Best Buy, said, "As part of our multi-channel strategy, we intend to strengthen our portfolio of store formats and footprints --- closing some big-box stores, modifying others to our enhanced Connected Store format, and adding Best Buy Mobile stand-alone locations --- all to provide a better shopping environment for our customers across multiple channels while increasing points of presence, and to improve performance and profitability."...

Questions for Discussion:

1. What, according to you, are the main reasons for Best Buy’s problems? Do you think the era of big-box stores is coming to an end with Best Buy's closure of 50 of its big box stores?
2. What strategies should Best Buy adopt to remain competitive?
3. What are the advantages and disadvantages of brick-and-mortar stores and online stores? Which are more suitable for developed markets like the US?

Key words:
Best Buy; Big box stores; Connected stores; Mobile standalone outlets; Amazon; Geek Squad; online retail





* This caselet is intended for use only in class discussions.
** More comprehensive case studies are priced at Rs.200 to Rs.700 (US $5 to US $16) per copy.