Best Buy Co. Inc. (NYSE: BBY), nearly beaten to death by Amazon.com Inc. (NASDAQ: AMZN) and big-box retailers with built-up consumer electronics departments, has kept turning itself around and around again. A new seven-step program, put together by our editors, might well do the trick once and for all.
Let’s call the turnaround plan “2020: New Blue.” The seven parts are as follows:
- Home Technology Solutions
- Services Driven by Geek Squad
- Category Growth Strategies
- New Category Growth
- New Business Growth
- Membership Loyalty
Why does the set of solutions make sense?
First, home technology is poorly understood by people who live at home. They are presented with remote video systems, alarms, fire protection, home theaters and Apple Inc. (NASDAQ: AAPL) iPhone-like solutions, which hooked up to speakers can play in any room.
Second, the Geek Squad supports products bought by Best Buy customers who need help putting electronics together, fixing them when they break and explaining them to customers who do not know how they work. It is an excellent source of revenue beside the core business.
Third, Best Buy is not just a consumer electronics store. It sells appliances, car electronics products, personal computers, tablets, phones, drones and cameras. The idea that one set of product managers or one set of store employees can drive growth in each of these is naive.
Fourth, Best Buy needs to reach into new product segments. Amazon was once an online book store. Today, it is the largest e-commerce business in the western world. Best Buy obviously needs to get into closely related businesses, However, it has to make a decision and start to roll these out, at least as experiments for feedback.
Fifth, new business might involve a drive more directly into the businesses of potential rivals that have strong businesses, like Wal-Mart Stores Inc.’s (NYSE: WMT) Sam’s Club and Staples Inc. (NASDAQ: SPLS).
Sixth, think Costco Wholesale Corp. (NASDAQ: COST). Paying membership drives recurring revenue. Recurring revenue helps smooth out the ups and downs of quarterly sales.
And seventh, Canada and Mexico. International sales have been dismal for Best Buy. Wal-Mart has proven that putting a great deal of effort into Mexico can pay off handsomely. An effort to be in dozens of countries is almost impossible to make work.
Finally, and notably, Best Buy domestic sales rose 23.9% in the most recent quarter, a start for a company that is in very deep trouble.
Best Buy’s stock is down 31% in the past 10 years. The S&P 500 is up 66% over the same period. Enough said.
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