Best Buy

Company Information

• Date Founded: 1966
• Industry: electronics retail
• Corporate Headquarters: Richfield, Minnesota
• Type: Public

Overview

Best Buy is a major consumer electronics retailer that operates thousands of stores across North America and worldwide. Founded in 1966, Best Buy grew from a modest audio equipment store into a big-box electronics giant, selling everything from televisions to cell phones, video games, movies, navigation equipment, digital cameras, computers, tablets, and home appliances. In addition to its large retail stores, Best Buy operates a range of smaller outlets, including Best Buy Express, Best Buy Mobile, Jiangsu Five Star, Magnolia Audio Video, Cowboom (later renamed Best Buy Outlet), and Pacific Sales Kitchen and Home. Best Buy also provides Internet, cable, satellite television, phone, and home security services. To complement its retail sales business, Best Buy offers an information technology support service in the form of the Geek Squad, a team of tech experts who address customers' electronics concerns and provide maintenance and installation services both in-store and at home. Despite facing stiff competition from online retailers such as Amazon, Best Buy remains the top consumer electronics retailer of its kind in the United States, thanks in part to an ambitious transformation of its business model led by CEO Hubert Joly in the mid-2010s.

According to its corporate website, Best Buy operates approximately 1,000 stores throughout North America and employs more than 85,000 people. The retailer conducts online sales through its Best Buy smartphone application and website. Given its long track record of success, Best Buy is widely recognized as an industry leader in the sale of consumer electronics.

History

Best Buy began as Sound of Music, a St. Paul, Minnesota, home and car stereo equipment retailer opened by founder Richard M. Schulze and his business partner in 1966. Sound of Music achieved quick success, and Schulze was able to buy out his partner just four years into the venture. As sole owner, Schulze expanded Sound of Music into a chain but continued to focus only on audio components throughout the 1970s. In the early 1980s, he began experimenting with new additions to his product line, starting with videocassette recorders (VCRs) and a limited range of appliances. This decision dramatically improved the company's sales and led to rapid growth. In 1983, Schulze rechristened his blossoming electronics retail chain Best Buy and began marketing toward a broader customer base. The effects were immediate: within the space of just three years, Schulze managed to both take his company public and introduce the first Best Buy superstores. By the late 1980s, Best Buy was a giant in the Twin Cities market. Although briefly rattled after a price war with competitor Highland Superstores, Best Buy ultimately continued to thrive thanks to the introduction of a customer-oriented approach to layout and sales incorporated in what the chain referred to as its "Concept II stores."

Best Buy's expansion continued into the 1990s, with new stores opening across the Midwest and elsewhere. At the same time, the chain cultivated a competitive rivalry with fellow big-box electronics retailer Circuit City. The two battled vigorously for several years before Best Buy overcame Circuit City to become the industry leader. Faced with changing consumer demands, however, the company was again forced to reinvent itself in 1997. In addition to redesigning the format of its stores and introducing even larger locations featuring more hands-on displays, Best Buy launched an online music store at BestBuy.com.

In the early 2000s, Best Buy began acquiring various consumer electronics retailers that were their smaller-scale competitors. Some of these included Magnolia Home Theater, Musicland Stores Corporation, and Future Shop, Ltd. (ceased operations in 2015). The most critical of these acquisitions, however, was Best Buy's 2002 purchase of a Minneapolis computer maintenance company known as Geek Squad. The Geek Squad, which provided customers with in-home or in-office technology support services, was integrated into Best Buy's retail stores and quickly became one of the company's trademark offerings. After several years of expansion, however, Best Buy began experiencing financial difficulties in 2009 that eventually led to the need for yet another company-wide reinvention. In 2012, under the direction of CEO Hubert Joly, Best Buy underwent a transformation that included middle management staff cuts, the introduction of price matching, and changes to store layouts. This transformation helped Best Buy compete with online retailers such as Amazon and restored the company's reputation as an industry leader. In 2019, Hubert Joly became executive chairman of Best Buy, having been succeeded as CEO by Corie Barry in June of that year.

In 2021, Best Buy laid off over 5,000 employees while announcing the closure of more stores. The need was in response to increased online purchases, a shift the company attributed to the COVID-19 pandemic. From 2022 to 2024, the company announced several more layoffs, and in April 2024, Best Buy laid off many Geek Squad agents. The company cited several reasons for these layoffs, including a change in corporate strategy to evolve with the ever-changing technology industry and decreased consumer purchases of high-value items. To align with consumer trends in streaming and on-demand services, Best Buy announced plans to eliminate DVD and other home-viewing physical media in 2024.

Conversely, Best Buy’s sub-brand, Best Buy Health, continued expanding by partnering with or acquiring several businesses, including the at-home care technology platform Current Health in 2021 for $400 million. Mount Sinai Health System, Atrium Health, and Mass General Brigham also partnered with Best Buy to create digital solutions for patients receiving care in the hospital and at home, as well as those with chronic conditions. Best Buy Health also released Lively Mobile2, a medical alert device, in the mid-2020s.

Impact

Since its founding, Best Buy has distinguished itself as an innovator in the retail sales industry. In addition to being one of the earlier pioneers of the superstore format, Best Buy contributed significantly to the superstore's continuing evolution. Best Buy's introduction of the Concept II store, in particular, marked the beginning of a new era for big-box retailing. By eschewing overly intrusive sales tactics and burdensome service plan contracts and focusing instead on well-stocked showrooms and one-stop purchasing, Best Buy radically changed the customer experience at major retail stores. In 1994, the company began rolling out Concept III stores, which, in addition to being larger than their predecessors, offered customers a wider selection of products and an expanded array of informative interactive displays. Taking its commitment to improving the customer experience and customer satisfaction even further, Best Buy introduced the Concept IV format in 1998. Featuring even larger facilities with an increased focus on high-tech products, Concept IV stores included separate departments for related products and additional hands-on displays that allowed customers to experiment with and learn more about products before making purchases. These innovations had a significant impact on customers' sales expectations and helped change the way big-box retail stores did business.

In addition to its broader impact on the retail sales industry, Best Buy is perhaps best known for its integration of and commitment to product support services through the Geek Squad. After purchasing the original business, Best Buy brought Geek Squad into its stores and turned it into a convenient way for customers to have the products they bought repaired and upgraded as needed. This allowed Best Buy to profit not only from the sales of merchandise such as desktop and laptop computers but also from the support services customers inevitably need to keep purchased products up and running. In time, Best Buy turned the Geek Squad into a mobile support service that sent tech professionals into customers' homes to repair products on-site and install home theater systems and other complex electronic equipment setups. Ultimately, the Geek Squad added another key element to Best Buy's overall business model that further influenced the evolution of the retail sales industry.

Bibliography

"About Best Buy." Best Buy, corporate.bestbuy.com/about-best-buy. Accessed 20 Jan. 2025.

"Best Buy Co. Inc. (BBY.N)." Reuters, www.reuters.com/company/best-buy-co-inc. Accessed 20 Jan. 2025.

"Best Buy Co. Inc." CNN Money, www.cnn.com/markets/stocks/BBY. Accessed 20 Jan. 2025.

"Best Buy Is Laying Off More Employees As It Reckons with Falling Sales." The Verge, 11 June 2024, www.theverge.com/2024/6/11/24174810/best-buy-layoffs-sales-teams. Accessed 20 Jan. 2025.

Green, Timothy. "Best Buy's Turnaround Is One for the Ages." Motley Fool, 28 Nov. 2018, www.fool.com/investing/general/2015/08/31/best-buys-turnaround-is-one-for-the-ages.aspx. Accessed 20 Jan. 2025.

Kelleher, Kevin. "How the Geek Squad Could Be Best Buy's Secret Weapon." Time, 19 July 2016, time.com/4411333/best-buy-amazon-geek-squad-hubert-joly. Accessed 20 Jan. 2025.

Schwartz, Noah. "5 Hospitals Partnering with Best Buy." Beckers Hospital Review, 9 Nov. 2023, www.beckershospitalreview.com/disruptors/5-hospitals-partnering-with-best-buy.html. Accessed 20 Jan. 2025.