Best Buy last week gave details of its “Connected Store,” a slightly smaller format which CEO Brian Dunn described as “remodeled big box stores that focus on connections, services and an enhanced multichannel experience.”
As part of a test, two full markets in the Twin Cities and San Antonio will be reset with the new format later this year. On the company’s fourth-quarter conference call, Mr. Dunn described some features of Connected Store:
A Buy Back and Tech Support service, which will enable new tablet owners to walk out with a wireless plan;
One larger, combined team in computing and mobile phones and tablets “that’s on a singular mission to grow market share in hardware, accessories, services, and, in particular, profitable connections”;
In what several reports likened to Apple’s Genius Bar, a central knowledge desk in the center of the store will assist customers with services and connections and offer training and classes;
Geek Squad services will be expanded and anchored at the front of the store for an improved customer and employee experience;
The checkout area will be more geared toward driving a “dedicated multichannel experience,” including enhanced in-store pickup;
Inside bigger stores, its Pacific Kitchen and Bath and Magnolia Design Centers openings will be accelerated.
In the two test markets, the big box square footage in aggregate will be decreased by almost 20 percent from store closures and downsizing of stores. At the same time, customer touchpoints or doors are expected to increase by over 20 percent, driven by the continued build out of more Best Buy Mobile standalone stores in these markets.
The new concept test dovetails with Best Buy’s overarching goals to expand its healthy e-commerce operations; grow its mobile business, including opening 100 Best Buy Mobile units in 2012; and expand services such as its warranties and tech support. Customer service will also be enhanced by programs such as 30-days-free phone support and greater investments in training and incentive-pay for associates.
The changes come as the electronics giant logged a $1.7 billion quarterly loss, its sixth straight decline in comps, and its most-aggressive cost-cutting plans yet to reduce operating costs by $800 million over the next three years by closing 50 big-box stores, laying off 400 workers, and other moves. The savings will free up money to invest in “Connected,” expand in China, and grow digital.
Mr. Dunn said that over the last three years the industry has been hurt by lack of innovation in many traditional CE categories such as television, PCs and gaming while getting squeezed by “greater price transparency and ease of cross shopping.” Added Mr. Dunn, “We knew we had to accelerate our cost reduction efforts, adjust our sales mix and significantly improve on the experience we were delivering for our customers.”