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Best Buy Strategy

1) Following are the key features of various elements of Best Buy’s Big-box retail model: Pricing(1): Recently in 2013, Best Buy claims to have “Everyday Low Pricing” and “Price matching” strategy to get consumers to shop during non-promotional events. Merchandising/Assortment: Focused on Consumer electronics, home office equipment, entertainment software, and appliances. No longer follows one-size-fits-all approach. Giving up the idea that Best Buy stores had to have similar product mixes and layouts. Each store would carry products for all the segments but focus on one or two of the demographic groups. Store Location & Count(2): 1,150 stores in United States, Canada, Europe, and China. Distribution: The nimbler network put more emphasis on distribution centers located closer to retail outlets. At present imports from Asia- where most products are sourced- are consolidated in large centers. These facilities feed large distribution center and smaller home-delivery centers.

The streamlined network will channel more loads to smaller facilities. In addition, some Best Buy suppliers are using a process known as collaborative planning, forecasting, and replenishment (CPFR) that automates replenishment by linking suppliers and buyers. Inventory Planning and Execution(3): Best Buy managed to improve in-stocks across the board, even as inventory levels continued to decrease. It was possible because of following reasons: Better Forecast: Initially it used to have multiple forecasts from internal departments and from outside parties. The retailer has now moved towards “one source of truth”, combining data from departments and partners into a single consolidated product forecast. Use of softwares such as “Oracle Retail Demand Forecasting” and “Oracle Retail Advanced Inventory Planning” also improved forecasting. Serve Local Market Need: Best Buy store employees have greater flexibility in changing the floor layout or overriding an inventory management plan so that store can reply demand spikes.

Faster Delivery: The supply chain reacts quickly to signals from the stores, reconfiguring shipments to accommodate a new floor plan or altering deliveries. Store Operations: The Company’s Customer-Centricity strategy calls for empowering sales associates to make judgments about the merchandising of products, the product mix, and inventory levels to meet the needs of consumers. Online Operations(4) :

Best Buy is revamping its online application. Hiring a number of e-commerce specialists who are currently in the process of getting Best Buy’s online operations up to date. Best Buy customers can now also take an advantage of the company’s loyalty program, “My Best Buy,” which rewards frequent customers by allowing them to log purchasing points that eventually equate to deals and prizes. Online sales now accounts to 40% of its revenue. b) The SWOT analysis of Best buy versus online retailers and mass retailers is:

BEST BUY
ONLINE RETAILER
MASS RETAILER
Strengths
-High number of stores
-Customer experience
-Leading retailer in electronics
– Geek Squad
-Reward zone
-High variety of product
-Competitive price
-High availability of product
-International reach
-Exponential growth
-No inventory
– High variety of product
-Competitive price
-Coupons exchange
-High number of suppliers and stores
Weaknesses
-Bad press about customer-centricity
-Neglected market
-Outdated strategy
-Power to suppliers
-Shipment time
-Lack of shopping experience
-Delay in receiving product

-Access to higher end customers
-Employee recognition
Opportunities
-Development in growing mobile and tablets market
-Diversification (ex:health)
-Emerging global markets
-Online store
-Improvement of customer service
-Acquisition of other business
-Showroom
-Higher end products
-Expansion of coupon business
Threats
-Online competitors
-Cheaper option(Walmart)
-Showrooms
-Social media platform store (“Facebook store)
-Google store
-Online competitors
– Similar store with customer experience
The recommendations to BestBuy:
Develop online store to better penetrate untapped or previously ignored market and reduce the inventory storage cost Use social media to seek innovations on a design platform (which can be provided with technical resources to produce their innovative ideas) or further develop the concept of Twerhelp (help given to consumers by Best Buy employees) International growth expansion: tap into emerging market and position the company as one of the first candidate to take advantage of the opportunity Store performance strategy: store performances (concentrate on the performing ones or reorganize the non-performing stores into a member-only showroom Strategic alliance with online platform such as Google to compete against Amazon.com because google may help improve the search tool of the online store or get more of the online market share; Best Buy could provide a lower end product mix which could compete with Walmart and put micromarketing

techniques in place to stores closer in location to Walmart (proximity=cheaper)

a. A long tail strategy for Best Buy would involve offering a great variety of products through its online store, even if those products are only attractive to a small percentage of the population. Drivers: On the supply side, IT would allow Best Buy to have nearly unlimited shelf space through its store online. Rather than keeping inventories, Best Buy would have agreements with certain suppliers to deliver the niche products directly to consumers once ordered. Popular products will continue to be in the Best Buy inventory. On the demand side, there is an even bigger role for IT. First, with a greater assortment of goods in the online store, IT needs to provide powerful search tools to help customers find what they are looking for. Second, customer information should be manage and analyse so that a greater number of detailed customer profiles can be generated. These profiles are the based for the third driver, recommendations and personalized web pages to each customer will generate the second order effects (5) that would allow more products to be discovered by more customers. Finally, to help customers make a more informed decision, IT can generate a platform for customers to exchange information about products as customer reviews. Even though, reviews for products already exist in the BB online store, it is not used as much as in other websites such as Amazon. One of the reasons is that this is a two sided market platform where the more reviews there are, the more customers will want to post their own reviews. So, IT may help to revitalize the platform by making it more conspicuous in their website and also by including links to reviews with the recommendations sent to customers.

b. The product of Best Buy is its service. There are three main aspects where we think that crowdsourcing could play an important role in designing the service: Merchandising, website design, mobile apps. Merchandising: There is a huge community of people who love technology. They are up to date on trends and new gadgets. As technology is their passion, they love to share and discuss about this subject and, of course, are very active online in social media and other virtual groups. Normally they are the early adapters and, thus, provide first hand opinion about the latest gadgets – even before

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