Consumer electronics retailer Best Buy dates back to 1966. The first store was an audio specialty store called Sound of Music, which primarily sold stereos and other music equipment. Sound of Music had expanded to seven locations by 1983, when the name was changed to Best Buy to reflect competitive prices and an increased product assortment that included home appliances, computer equipment, video games, and home theater systems.

By the early 2010s, Best Buy was facing numerous business challenges. In particular, showrooming had become a trend that negatively affected electronics retailers. Customers would walk into stores to check out electronics and appliances—and then purchase the products for less money from other retailers such as Amazon. Best Buy had formerly attracted many customers for products such as CDs and DVDs. However, these products were becoming obsolete as music, movies, and video games moved to digital platforms.

Competitors like RadioShack, Circuit City, and hhgregg had already shut down or filed for bankruptcy, and Best Buy was facing the grim prospect of meeting the same fate.

Best Buy started to turn its business around when Hubert Joly joined as the new CEO in mid-2012. Joly, who had previously served as CEO for Carlson Wagonlit Travel, an American hotel and travel conglomerate, looked to reshape showrooming from a threatening issue into a successful business strategy. In addition, he sought to drastically improve the service aspect of Best Buy to retain customers and earn their loyalty.

One of Joly’s most important changes was Best Buy’s price-match guarantee. Through price-comparison apps, customers saw that companies like Amazon nearly always offered the same product at a lower price. It seemed there was no reason to purchase products at Best Buy; customers were better off looking at products in store and ordering online. Although the guarantee was costly, price matching gave customers a reason to purchase their products at a Best Buy store instead of at a competitor’s.........

Questions

1. What were the keys to Best Buy’s success? What are the challenges it faces in today’s retail environment?

2. How else can Best Buy compete against both retail competitors like Walmart and Costco and online competitors like Amazon?

3. Should Best Buy focus on becoming a showroom for companies that lack their own physical retail outlets What are the pros and cons of this approach?