The retailer uses third-party service providers including Bungii and Dolly to make deliveries. They can also place an order for any product and choose to pick it up at a nearby outlet.īest Buy’s outlets also offer same-day delivery of online orders. Shoppers can go to /outlet to check out what’s available at their local store. The chain is integrating outlets into its digital operations, as well. Every new outlet will have a Geek Squad area where customers can get technical support. The retailer is not skimping on service even though it is selling marked down products. Tech is a completely different model, so I’m skeptical that this has a big growth trajectory.Best Buy is expanding the product selection at its outlets, adding gaming products, laptops, mobile phones and tablets to the mix. “What are the average cost savings? Are shoppers expected to shop regular stores and outlet stores as if this was a fashion retailer? If the answer to the last question is yes, markdowns have to be substantial and real as opposed to fashion where the markdowns are often substantially lower than list price but not so much real prices. “On the surface this sounds great, but what really differentiates an outlet?” wrote consultant Ken Lonyai. “The key is not to dilute core store performance or lose pricing discipline in what is not a high margin business to start with,” wrote Phil Rubin, founder of Grey Space Matters.Īnd at least one BrainTrust member did not see the outlet model coming into fashion in the electronics space. Which means this is also a geographic strategy as well.” The problem is when they start visiting outlets instead of regular price stores. “Outlet stores can also put a brand on a slippery slope,” wrote Mr. Some who saw potential upside to the strategy, however, cautioned about where it could lead. “The biggest benefit may come from the potential of converting the impressive 16 percent of customers new to Best Buy into traditional Best Buy store customers.” “In an economy facing inflationary headwinds, expansion of the outlet channel should be a winning strategy – and in offering same-day delivery, BOPIS, a convenient way to check inventory online and an in-store Geek Squad, Best Buy isn’t cutting corners, which will easily differentiate it from other outlets,” wrote Jeff Hall, president of Second to None. Harmon said that 16 percent of customers shopping at Best Buy’s outlets are new to the chain and 37 percent are “re-engaged.” The outlets also help Best Buy attract new customers and engage with others who have not recently shopped from the chain. “If Best Buy needs more space in existing prime stores to sell full margin product and maximize gross margin dollars then this sounds great.” “This sounds like a ‘best use of space’ strategy as much as, if not more than, an ‘outlet store’ strategy,” wrote Jeff Sward, founding partner at Merchandising Metrics. In FY ’22, gross liquidation recovery rate is almost two times higher than alternative channels.” The outlet stores serve a number of functions for Best Buy.ĭamien Harmon, executive vice president, omnichannel at Best Buy, in March on the retailer’s fourth quarter earnings call said, “These outlets unlock value by alleviating space and capacity from our core stores, and they are an important element of our circular economy strategy by providing a second opportunity for products to be resold instead of ending up in the landfill. “Outlet stores are a strong strategy for minimizing risk during economic uncertainty when consumer spending is more focused on value spending.” “Outlet stores will help Best Buy deal with excess, open box or returned goods while keeping that revenue in house, promoting the sale of services like installation, and controlling the brand messaging end to end,” wrote DeAnn Campbell, chief strategy officer at Hoobil8.
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