‘Samsung Experience‘ Now at 800 Best Buy Large-Format Stores
"Samsung Experience” store-within-a-store departments are now in 800 of Best Buy’s large-format stores and “practically all” of the chain’s standalone mobile stores, CEO Hubert Joly said at its shareholders meeting in Richfield, Minn., Thursday. “By the end of the summer,” it will open the rest of its planned Samsung Experience shops, he said. There’s been “very positive” customer response to the format, he said.
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Best Buy will expand the format chainwide by August, Joly told an investor conference early this month (CED June 7 p4). As of then, it had installed the Samsung department at 1,000 stores, he said. There’s also a Samsung Experience section online at bestbuy.com.
The chain is “only in the early days” of its “transformation” into a stronger company -- just the “second inning” -- and “much of the work is ahead of us,” Joly said Thursday at his first shareholders meeting as Best Buy CEO. But the company has come a long way from a year ago, when Brian Dunn and founder and then-Chairman Richard Schulze resigned from the company and Schulze offered to buy Best Buy and take it private, said Chairman Hatim Tyabji. Schulze has since returned to the company as chairman emeritus. “A year later everything is different,” said Tyabji. Its stock had been trading as low as $11 a share, but now “hovers around” $27-$28, he said. Its shares closed 3.9 percent lower at $26.59 Thursday.
Best Buy’s “first priority is to accelerate online growth,” said Joly. The several initiatives planned on that front still include replacing its decade-old e-commerce search platform with enhanced technology providing more “relevant results,” he said. One goal is to provide a “consistent customer experience” across mobile, tablet and PCs, including “common navigation” and product information, he said. Enhancements will also make it easier to add Geek Squad services to online shoppers’ carts, he said. The “second priority” for this year is to “escalate the multi-channel customer experience,” he said.
Another “pain point” that Best Buy is trying to address is products not being in stock when customers are shopping online, said Joly. Two to four percent of all online traffic doesn’t result in a purchase because it doesn’t have inventory in the distribution centers, so customers are told the items are out of stock, he said. However, 80 percent of the time one or more Best Buy stores have those products in stock, he said.
Best Buy’s new “shift from store” capability is designed to cut down on that problem by making products listed as out of stock online available to bestbuy.com customers from stores that have them in stock, said Joly. The company already made most of the IT investments needed to “move this initiative forward over the next several months,” he said. The chain started a pilot test of the initiative in 50 of its retail stores and if it’s successful, Best Buy will “of course extend it to more stores,” he said. A fourth “priority” is to make supply chain efficiency improvements, he said.
Best Buy’s online sales grew 16 percent in the past quarter compared to the same quarter a year ago, said Joly. But its online market share remains “significantly lower” than at its bricks-and-mortar stores, so it’s “far from declaring victory here,” he said. The retailer also remains dedicated to its green initiatives, said Joly, telling shareholders it recycles more than 170 million pounds of e-waste each year.
Preliminary results showed that the “majority” of Best Buy shareholders voted in favor of all four proxy proposals made by the company, including a “Say on Pay” proposal on executive compensation, said Tyabji. Eighty-three percent of shareholders voted in favor of the Say on Pay proposal, he said. Proxy advisory company Glass Lewis had recommended that shareholders vote in favor of the proposal, but another proxy advisory firm, Institutional Shareholder Services (ISS), recommended that shareholders vote against it, Best Buy said in a letter to shareholders. ISS’s “primary concerns” were continuity payments made to retain executive management through the past year’s “crisis” at the company and the compensation delivered to Joly to replace the amounts he forfeited upon resignation from his prior employer, hospitality and travel company Carlson, said Best Buy.