Best Buy operates more than 1,000 electronics stores and employs around 125,000 people. It launched in the 1980s as part of the hot retail trend of "big-box" stores offering choice and convenience at low prices. It acquired the Geek Squad in 2002 to offer service for increasingly complex computer equipment. It survived the Great Recession and saw the closing of rival Circuit City. However, it did not survive unscathed. It survived the recession through aggressive cost cutting, including the closing of operations in Europe and China and downsizing at its U.S. corporate headquarters.

After the recession came the next big challenge, competition from online retailers. In 2010, Amazon introduced an app for comparing prices across retailers, and Best Buy suddenly found that it was losing comparisons despite its low-price strategy. On top of that, Amazon offered the convenience of shopping anywhere and anytime. In addition to improving its distribution and inventory management and improving employee benefits, Best Buy made the decision to utilize a differentiation strategy, making its face to face personal touch and in-home service a distinguishing characteristic.

Best Buy also seeks distinctive products to sell. It was a leader in opening boutique-style store departments for Apple, Samsung, and Microsoft; those brands pay rent and use their own salespeople or train Best Buy associates. This way, Best Buy can improve customer service while increasing revenues. Another move was to form a joint venture with Amazon. The two rivals agreed to sell a line of smart televisions equipped with Amazon Fire TV and Alexa voice assistant, available only from Best Buy and Amazon.

Incoming CEO Corie Barry, long-time company executive, believes there is more market share to be had. She plans to gain it by continuing to differentiate Best Buy from competitors.

Strategies Evolve with the Times Best Buy operates more than 1.000 electronics stores and employs around 125,000 people. That the electronics retailer continues to exist at all at the time of this writing is a testimony to management's ability to reinvent the company for changing times. Best Buy launched when Its founders accepted that their regional music store could not compete in the 19805 against the hot retail trend of \"bigbox\" stores offering choice and convenience at low prices. Best Buy outperformed Its preexisting competitor, Circuit City, in selecting locations and keeping pace with technology through the 19905. As computer technology became more popular and complex. Best Buy began offering services through its Geek Squad. a startup company that Best Buy acquired in 2002. When the Great Recession hit several years later. Circuit City went out of business. but Best Buy survived through aggressive cost cutting, including the closing of operations In Europe and China and downsizing at its U.S. corporate headquarters. It lived to face the new challenge: online retailing. During the past decade, as Best Buy evaluated its opportunities and threats, it benefited from the toss of some key retail competitionnot only Circuit City but also cutbacks at Sears and other department stores selling electronics. Meanwhile. Amazon transformed from a bookseller with a line of CDs into a major low-priced threat to almost every retailer. in 2010. Amazon introduced an app for comparing prices across retailers, and Best Buy suddenly found that It was losing comparisons despite its lowprice strategy. On top of that, Amazon offered the convenience of shopping anywhere and anytime. In the face of this major threat. Best Buy needed more than low prices. It invested in better distribution and inventory management to keep up with Amazon's superior customer fulllment. Best Buy improved employee benets and training, to provide better customer service in stores despite the sti competition for talent in the labor market. Best Buy also wanted to give consumers something that Amazon didn't offer. An online retailer can offer low prices and fast delivery, but the human touch from an online company is rare. Best Buy's executives saw an opportunity to deliver that human touch. Management opted for a differentiation strategy. Best Buy would offer more services: building on its experience with the Geek Squad. it began offering a service called in-Home Adviser. Best Buy had convinced consumers that calling Geek Squad was like having their own tech support team. InHorne Advisor added an experience like having a technology consultant to advise them in using electronics to improve their lifestyle. The service includes free home visits lasting 50 to 90 minutes. Best Buy is betting that building longterm relationships with households will be protable in the long run. Best Buy trains its advisers to ll the role of consultant by putting consumers at ease and quietly appraising what technologies are in use and what potential there Is for modernizing. Rather than pitching Ideas. consultants learn to ask about preferences and needs. In addition, the company pays advisers a salary. removing the pressure to close sales in order to earn commissions. Best Buy also seeks distinctive products to sell. It was a leader in opening boutiquestyle store departments for Page 2.4 Apple, Samsung. and Microsoft; those brands pay rent and use their own salespeople or train Best Buy associates. This way, Best Buy can Improve customer service while increasing revenues. Another move was to form ajolnt venture with Amazon. The two rivals agreed to sell a line of smart televisions equipped with Amazon Fire TV and Alexa voice assistant. available only from Best Buy and Amazon. Best Buy also sells service packages, including the Total Support Tech program, which costs $199 for a year of tech support from the Geek Squad for any electronics product purchased from any retailer. For elderly customers concerned about their health and safety, a program called Assured Living equips them with remote monitoring and communication. Recent sales results suggest that Best Buy's strategy was smart, at least for the latest changes in retailing. Sales have risen signicantly. Best Buy's chief executive, Hubert Joly, sees plenty of growth potential as he prepares to retire and turn over CEO duties to Corie Barry. a tong-time company executive and one of the few women leading a Fortune 500 company. .loly notes that Best Buy customers typically direct only one-fourth of their spending on electronics to Best Buy. leaving the remainder as a potential source of growth from existing customers. Further, Best Buy and Amazon together hold about one fourth of the U. 5. consumer electronics market The other threef0 ur'ths is a potential source of growth. Joly wants Best Buy to win more of those sales by continuing to differentiate itself from the competition. Questions for Diswssion 1. Review the details in this case and identify an exampie of (a) a corporatelevel plan or strategy and lb} a fu nctionalvlevel plan or strategy. 2. Which of the changes in Best Buy's strategy do you see as being related to its rivalry with Amazon? Explain. 3. Best Buy has opted for a strategy of differentiation from online retailers. How do you expect the opportunities and threats associated with this strategy mlg ht change over the next few years