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Improvement Suggestions for Best Buy - School Paper

Status: Tell Us More
by GeorgeA on ‎06-23-2013 12:10 AM

Hello, the following lines are for a school assignment, but I believe they have relevance, so here they are. Our instructions were to pick a relevant US company and write the assignment in the first person, as if we worked for the company.

 

Best Buy: A Proposal for Improvement

            Sound of Music, which would later turn into Best Buy (BB) was founded in 1966 as a record store. As available technologies and customer service norms changed, so did our business model. Since then, Best Buy has evolved into a technological hub where people can get music, movies, computing devices, electronics, and appliances. We started our online store in the year 2000, and we acquired Geek Squad (GS) three years later with more than acceptable results. As of 2006 our outstanding shares had reached their maximum value at 56.00 per share, while our most visible competitor’s (Amazon) share was about 35.00. Unfortunately, that boon period would not last, after 2006, the value of our stock declined to its current price of 26.00 while Amazon’s has climbed to 273.00. We made a series of acquisitions with disastrous results that drove the price of our stock to a low of 21.00 in 2008. By the figures and facts shown, it is evident we have two problems: first, our current business model needs to improve; second, we have an image problem. To change that, we prepared a few suggestions to modify our business model and, at the same time, improve our public image. These changes will eventually help us to increase profits and avoid excessive layoffs.

 

Size of Retail Locations

In order to improve our sales per square foot ratio, it is necessary to reduce idle space. The current initiative to reduce space to favor smaller devices such as smartphones and tablets is good, but it falls short in other categories. For example, as a customer enters a Best Buy store, he or she expects to see an extensive laptop exhibition area. With the current initiative, that would not be possible in some stores. Radio Shack already uses this strategy; therefore, it is advisable for Best Buy to keep a tangible differentiation. A viable option would be to modify the Geek Squad service to fit the need for less space. Also, in accordance to that idea, we could do away with the music CD areas by replacing them with experience sections with music available to be heard in multiple personal kiosks. Direct downloads would be available to customers, which they could execute directly from their smart phones or with a store code to be used online.

 

Merchandise Display

Our exhibited merchandise in the computer department is always off or password locked, preventing the customer from fully experiencing devices like PCs, laptops, tablets, and smartphones. Best Buy should change that policy by offering a more intimate and improved customer experience. That calls for the use of a viewing model similar to Apple’s, where the items in exhibition are powered and available for the customer to experiment them. This hands-on demonstration should include functioning Wi-Fi networks with limited connectivity to trusted sites.

 

Return Policies

Eliminate the fifteen day return policy and change it to a more consumer-friendly sixty day one for every customer. Thanks to Costco’s ninety day return policies in electronics with no restocking fees, customers in general expect a more generous return policy. Personally, I can attest that this differential in return periods becomes critical in considering the risk associated with purchases of more than $500.00. According to ihatebestbuy.com this is one of the most upsetting issues customers have with our store. Also, numerous complaints have been filed from customers who were denied a return for not being Premier Silver members (PSMs) of our Rewards program. PSMs get sixty day returns instead of fifteen. We believe that this distinction only alienates other buyers and does not do much to increase our efficiency rates.

 

Loyalty Program

            Modify the ninety day expiration window in our loyalty program, or eliminate it completely. In light of recent consumer pressure, many stores have changed their loyalty programs so the earned incentives may carry over longer periods, or in some cases, do not expire at all. According to techjournal.com the push for non-expiration-date rewards began with American Express and IHG (a hotel chain) and later expanded to other industries such as airlines, grocers, and financial services. If we are to continue to offer a reward program, we should consider expanding the expiration date. It should be noted that low cost retailers in the electronics industry like Wal-Mart and Amazon do not offer loyalty programs. That may open a debate to reconsider to either use the program to keep our customer base happy or do away with it if a low-price strategy is to be followed.

 

End Outsourcing Agreements and Reconfigure the Online Store

            According to Forbes and the Wall Street Journal, Best Buy’s online store is one of the worst in the industry: its inventory is scarce, return policies are not in par with the current market conditions, and its functionality is not even close to that of Amazon. One example is the simple task of adding a gift note to some item, it is just not possible. Also, Best Buy’s website is a laggard compared to those of the competition; a single task, say a purchase, takes at least double the time it takes at Amazon.com. In light of the facts described, Best Buy should end all of the outsourcing contracts at once; our online store is a core function necessary for our own survival and should not be delegated to third parties. We also suggest improvements to the online store focused on usability and ease of access. Additionally, the online store should include direct links with access to customer focused groups, for example blogs and open forums about the use of windows 8; device ratings (like Amazon’s), and direct online help for normal issues with new computers. Actually, resembling Costco’s concierge service, we could offer free use of the Geek Squad’s service for 30 days for new items. This would work as a trial and could increase Geek Squad’s sales by a significant percentage.

 

Geek Squad

            Surprisingly, Geek Squad is known to the community in general as an on-site service available by visiting customers in their homes or by having the customers visit the Geek Squad store. That is just short of the actual reality and is not acceptable; our efforts to increase customer awareness about Geek Squad’s great online help capabilities should be escalated. By doing so, Best Buy would capture new customers, achieve higher satisfaction rates, and more revenue. There are competitors offering similar services, but, in comparison, Geek Squad has a unique brand recognition that it can, and should capitalize.

 

Public Relations

            In the last two years, a barrage of negative publicity from Forbes, the Wall Street Journal, and USA Today have, without a doubt, hurt our image. Best Buy should hire a professional public relations firm and develop a positive costumer-centered strategy. Any positive changes and improvements should be reported to customers and consumers in general via publicity, news outlets, and marketing campaigns. If Best Buy is to maintain and improve its market position, a better image in the public eye is paramount.

 

Conclusion

            The strategies outlined are centered in customer satisfaction and the use of more efficient revenue generating means. Customer satisfaction and good public relations are of essence. Best Buy or any other company, is nothing without loyal customers; therefore, our efforts must be centered on them first. Also, our current sales and marketing system needs a complete overhaul; that is true for our store-front sales; but, it is painfully true for our currently outsourced online capabilities. The adoption of the proposed strategies should put an end to our current downward spiral, and, in the short term, bring Best Buy back to its rightful place as market leader.

 

Disclaimer: The above lines were originally written for a business class, facts may or may not be exact, or may have changed. This is not a formal proposal and it is not intended to be. The essay is written in the first person for classroom purposes; I am not affiliated with, nor represent  Best Buy in any way or form. The intentions for publishing in this forum are: 1) to comply with a class requirement, and 2) to add these ideas to this forum as others have done in the past.

 

Thank you.

Status: Tell Us More
Thanks for the very thoughtful and detailed suggestions. I would love to hear anyone else's take on these ideas. It might be better if each idea was posted separately and even better if they were combined with an existing idea if it were the same idea. Remember to vote for an idea if you like it.
Comments
by Senior Social Media Specialist Senior Social Media Specialist
on ‎06-25-2013 02:36 PM
Status changed to: Tell Us More
Thanks for the very thoughtful and detailed suggestions. I would love to hear anyone else's take on these ideas. It might be better if each idea was posted separately and even better if they were combined with an existing idea if it were the same idea. Remember to vote for an idea if you like it.
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