Best Buy Mobile. Not the answer.

Tom Dougherty, CEO – Stealing Share

30 March 2012

This feels like reducing overhead rather than creating preference

Things are not looking very good for Best Buy. Its last quarter, which ended March 3, had it down by $1.7 billion, a figure even more disheartening when you consider that the loss included an additional week of sales to help soften it. Best Buy’s answer to the poor performance is a shift toward fewer big-box locations and an increased amount of mobile locations. There is one problem with the Best Buy mobile strategy, however. Whatever issues it has with the big-box stores will be the same for Best Buy mobile stores. Neither has a clearly stated reason for being nor a compelling enough message to establish brand loyalty.

“AT&T, Verizon, RadioShack, the list goes on. Mobile stores already saturate the market.”

best buy mobile

The problem with Best Buy’s current big-box stores is that you can get everything they carry elsewhere. Its brand is not special nor are the products it sells, making it just a store rather than a destination.

Sure, it has a large selection that lets you get all your electronics/appliance shopping done. But how many people go out to buy a TV and a fridge on the same outing? Typically, you either go for one or the other. (Or you go to Costco.) If you are in the market for a fridge, Best Buy just joins a long list of stores whose value is also simply “a means to an end.”

On the other hand, if you want IKEA furniture, you go to IKEA. If you want a MacBook, you go to the Apple Store. There is value in IKEA and the Apple Store because of the experience, the focus and, most of all, having brands that offer something of greater value to the consumer than price. Best Buy is not a very pleasant shopping experience. Nothing it sells is particularly special, and it uses the rather emotionless value of price as its brand.

So are Best Buy mobile stores going to be any different?

The problem with transitioning to more mobile stores is that too many mobile stores exist and Best Buy’s brand of price is not meaningful enough to increase usage beyond their stores’ proximity to consumers. AT&T, Verizon, RadioShack, the list goes on. Mobile stores already saturate the market.

Best Buy’s success does not rest in adjusting the size of its stores. It rest in adjusting its brand. Downsizing the stores is just addressing a symptom. It’s not addressing the cause.

Instead, Best Buy must decide who is it for and who is it not for. What does the brand promise? Best Buy is confusing its brand awareness as being meaningful when it is preference that signifies brand equity. The reason Best Buy is closing stores, laying off employees and switching to a mobile store model is because it hasn’t redefined its brand and used that to dictate structural changes.

Otherwise, it will soon become as irrelevant as RadioShack or, gulp, Circuit City.

See more posts in the following related categories: Best Buy Best Buy Brand Best Buy market share best buy mobile best buy sales best buy stock


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