Friday, March 7, 2014
When Best Buy Co. Inc. CEO Hubert Joly visited stores during his first week on the job in September, he quickly noticed something was amiss. Why, he asked, did some locations relegate some appliances to the back of the store?
After all, Joly correctly noted, appliances both large (refrigerators, cooking ranges, washing machines) and small (blenders, toaster ovens) have been hot items recently, one of the few growth categories that Best Buy has only begun to tap.
The company apparently got the message. Encouraged by nine consecutive quarters of same-store sales increases in appliances, Best Buy is poised to expand aggressively into this category. The Richfield, Minn.-based consumer electronics retailer plans this year to open 18 to 25 of its high-end Pacific Kitchen stores, a store-within-a-store concept. Best Buy also plans to shift more of its existing retail floor space away from CDs and DVDs toward higher-growth areas like smartphones, tablets and appliances.
At a time when Best Buy has struggled to grow same-store sales, appliances have performed very well. Since the fourth quarter of 2011, Best Buy has averaged a quarterly same-store sales gain of 10.3 percent.
As the housing market continues to recover, Best Buy's push into appliances is a "superb strategic move," said Burt Flickinger, managing director of the Strategic Resources retail consulting firm in New York."
In fiscal 2012, appliances made up only 6.3 percent of the company's $50 billion in revenue. Officials declined to give a target for revenue growth this year.
Some experts think that a beefed-up appliance section will help Best Buy reach a customer base that has so far proven elusive to the retailer: women.
"Women buy appliances," said Lynn Switanowski, founding partner of Creative Business Consulting Group in Boston. "It's a good strategy to build loyalty among women and then expand (that appeal) to other products" in the store.