For the better part of 2017, Best Buy has attempted to dig itself out of a long running sales slump by appealing to customers through revamped, high-tech store displays, and pilot programs, such as try-before-you-buy. These strategies just might be working as the electronics retailer reported higher than expected sales for the second quarter of the year. But will that last?
Sales at Best Buy increased 5.4% compared to the same time last year, the retailer announced today, attributing the gains to an increase in sales of wearable devices, smart home systems, newly launched mobile phones, and appliances. In all, revenue rose 5% to $8.9 billion, while online sales rose 31% to $1.1 billion.
Don’t Expect A Repeat
Despite the gains — the highest the company has seen in nearly seven years, according to The Minneapolis Star Tribune — Best Buy executives don’t seem to have much confidence the turnaround will stick.
In fact, CEO Hubert Joly cautioned during the company’s earnings call that the higher sales aren’t the “new normal” for the retailer.
He cautioned that while the company has a unique position in the electronics industry, the mid-single-digit rise in comparable sales likely isn’t sustainable.
Best Buy’s second quarter sales were likely buoyed by the bankruptcy and store closures of several competitors, including hhgregg and RadioShack.
Reps for Best Buy previously declared that the retailer would do everything in its power to impress customers of the now-defunct retailer as they wandered into stores. At the time of hhgregg’s bankruptcy, analysts estimated that Best Buy could pick up about 20% of hhgregg’s sales after its liquidation ended, for a total of $335 million.
Keeping Up With The Competition
Because the rate of new customers from hhgregg and RadioShack are finite, Joly told investors that the company has a plan to remain competitive with competitors like Amazon and Walmart.
For instance, the executive pointed out that the retailer is currently undergoing a national rollout of its in-home consultation service.
The in-home advisor program sends professional sales consultants to customers’ homes to cover all their tech needs from all vendors. The reps can help design full-house sound systems, hookup electronic devices, and perform other tasks.
The service will be available in all stores by the end of September, Joly said.
Additionally, the company is continuing to revamp stores with new displays and products. Joly noted that by the end of September, 700 stores will have Amazon and Google Home showrooms.
The mini-stores, located near the smart home department, are intended to allow customers to explore “what’s possible with voice technology” with the help of specially trained Geek Squad agents and other employees.
Source: Consumer Reviews