Published December 2001

Best Buy a ‘long-term player’ intent on growth

By Kimberly Hilden
Herald Business Journal Assistant Editor

While the economy may be slowing, Best Buy, the nation’s largest specialty retailer of consumer electronics, personal computers, entertainment software and appliances, is intent on growing.

“We’re a long-term player, so even though there could be some economic softness, most of that is cyclical, and it’s just a matter of duration,” said Chairman and CEO Richard M. Schulze, who started the Minnesota-based company in 1966 as the Sound of Music. “We’ve got a longer-term game plan that we are moving toward, and we just set ourselves in that direction.”

Since 1989, the company has been moving toward its goal of entering every major U.S. market, and now is in the midst of expansion plans that include opening 60 Best Buy stores a year for the next three years — to bring the total to 650 nationwide.

In late October, Best Buy opened 11 stores, including four in the Northwest: Lynnwood, Bellingham, Federal Way and Silverdale.

The Lynnwood location, at 19225 Alderwood Mall Parkway, features the company’s newest store design: “dual racetracks,” or aisles, that branch out in three directions.

With this design, “you can easily scan the store and see which area you want to got to and then go directly to it,” company spokeswoman Laurie Bauer said.

Also, the product placement is complementary, so that a customer wanting to buy a home-theater system can find televisions, speakers, DVD players and entertainment centers next to each other, Bauer said.

Something new to Best Buy — and featured in the Lynnwood location — is a Transaction Center. Located in the rear of the store, the center is a place where customers can sit down with a sales assistant to make purchases that might take a little time and planning, such as selecting a calling plan for a new cell phone or signing up for DirecTV to go along with a new home-theater system.

“This has shown in our tests to be very effective,” Bauer said. “It makes people feel like they’re not being rushed through in a purchase.”

But even before a customer makes a purchase, Best Buy wants to make them feel comfortable and empowered, with trained, non-commissioned sales assistants, Schulze said.

“In our store, the customer’s always in control,” he said. “We want to make sure the customer goes where they want to go, sees what they want to see. ... The sales persons on our floor are trained to provide information as the customer needs it, not the other way around.”

The philosophy seems to be working for Best Buy’s bottom line.

According to the company’s 2001(FY) report, comparable store sales increased by 4.9 percent from the year before, with average revenues per store figured at about $38.9 million. And the latest figures, those for the second quarter of 2002 (FY), which ended Sept.1, show a 2.8 percent increase in comparable store sales from the previous second quarter.

To make sure those sales continue to grow, Best Buy has begun implementing a Customer Relationship Management strategy to personalize its message.

By customizing its database and finding out what it is that customers are interested in, the company can “begin to have a dialogue, communicating just specific information consumers have a particular interest in,” Schulze said.

For instance, spokeswoman Bauer recently bought a computer at Best Buy with her credit card. Now, special computer-related offers from Best Buy show up on her credit card statement.

“Customer Relationship Management is really the longest-term, best objective we could create to establish a bond and a loyalty between us and our customers,” Schulze said.

But it wasn’t until the company had a “meaningful Internet presence” with the launch of BestBuy.com in June 2000 “that we could even begin to think about customizing our database,” Schulze said.

So, with CRM under way and grand openings occurring on schedule, Best Buy will continue with its game plan — even if the economy is sluggish.

“We’re the industry’s largest, and certainly its leading, retailer,” Schulze said. “So we’ll set the tempo. We’ll set the trend. We’ll build the market.”

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