Best Buy is the world’s leading consumer electronics retailer. It offers a variety of items including televisions, DVD players, computers, home appliances, music systems, and more. In addition, it also provides a full range of technical support services to assist customers with using their new electronic products. The company operates stores in the United States and Canada.
As the electronics industry evolved during the 1980s, many chains started to compete head-on. Many retailers took a beating in their profit margins. Others expanded rapidly, and some even went public. However, Best Buy remained the clear market leader in the lucrative American consumer market.
The company’s concept centered on a superstore format, featuring well-stocked showrooms and answering centers that gave shoppers self-help product information. In addition, the store featured a low-salesforce environment, ensuring that most shoppers had a pleasant experience.
In the early years, Best Buy had a stronghold on its target demographic, young to middle-aged males. However, as the economy began to struggle, the company had to adjust its strategy to address the decline in its sales. To remedy this, Best Buy launched a loss-leader program in 1988, which included discounted compact discs. At the time, many consumers were buying low-priced compact discs as a means of saving money.
By the mid-1990s, however, a price war had begun to escalate, and many chains vying for business in the competitive consumer electronics market had to adapt to the new dynamics. For instance, some companies began selling floor models of TVs that were already for sale. This encouraged a change in the overall product mix.
In 1992, the company hit a billion dollars in annual revenues. That figure helped Best Buy to expand into new markets. The company also introduced a new store concept that emphasized one-stop purchasing. These concepts, known as Concept II and Concept III, replaced dingy, industrial-style stores with bright, open layouts.
Best Buy also opened its first Canadian-branded store in Mississauga, Ontario, in 1991. Since then, the company has expanded into Canada and other parts of the world.
Best Buy has faced significant downward pricing pressure during the past decade, but it has rebounded with its best year in fiscal 2004. The company plans to open 60 more stores in the U.S. and Canada in fiscal 2004, and hopes to grow its market share to a record level.
The company also purchased Minneapolis-based Geek Squad, Inc. in October 2002. Like Best Buy, Geek Squad offers a wide range of electronics. Among the items available at the store are Insignia HDTVs, Rocketfish cables, and Flash drives. Also, the company offers a wide selection of branded products, including InIt cases and Geek Squad flash drives.
In the last few years, the company has been facing more competition from mass merchants. The company has also had to deal with shorter product cycles. Additionally, its business model has faced stiff competition from e-commerce providers.
But Best Buy still maintains its position as a leading consumer electronics retailer, offering a range of products, services, and repair centers. Moreover, the company’s business model has been designed to capture the gains from technological advancements. And as it continues to develop, the company’s business model is likely to remain a successful one.
