Best Buy: Detailed SWOT Analysis of Top Electronics Store

About Best Buy

Best Buy started as a small audio speciality store known as “Sound Of Music” which specialised in selling stereos and other audio equipment. It was founded by Richard Scholes in 1966 in St. Paul Minnesota. After their success in this venture, they decided to expand their business, however, emphasized providing all types of electrical appliances. They became a great hit, sales grew to grow dramatically and in the year 1983 they changed their name to “Best Buy”.

In the course of the next ten years, their sales grew from 9.3 Million to 1.6 Billion Dollars. This made them the topmost electronics retailers in the U.S. in the year 1993, but after the rise of the internet, there was a paradigm shift in commerce platforms. E-Commerce had become the trend, this led to a decline in retail outlets in this situation best buy was still hanging tight but they couldn’t keep up with the big brands such as Amazon. Thus, after the year 2009, it began to decline and was not able to generate many sales.

By the year 2012, many industrial analysts had forecasted that they will go bankrupt. However, in 2014 they made a comeback after bringing in the new CEO Hubert Joly. They focused more on customer satisfaction along with this they also focused on cutting down expenses. Through this, they were able to jump back on track and are now successfully running across the U.S., Mexico and Canada.

Products of Best Buy 

Best Buy has held its position in the market by selling the following – 

• Consumer Electronics
• Appliances

Competitors of Best Buy

Best Buy is in constant competition with the following companies – 

• Walmart
• Target 
• Costco
• Amazon

Let us analyse the SWOT Analysis of Best Buy to get an idea of how it bounced back from its downfall.

SWOT Analysis of Best Buy

SWOT Analysis is a technique that is used to assess the internal and external factors of a business. In this Strengths and Weaknesses are the internal factors of the business whereas Opportunities and Threats are the external factors of the business. 

1. Strengths of Best Buy

Let’s start with the S in Best Buy’s SWOT analysis, which stands for Strength. These are the internal variables that have allowed Best Buy to keep its top spot. 

• Great Customer Service – After their downfall in 2009 they began to realise that nothing is more important than customer service and experience. The new CEO Hubert Joly recognised that both of these elements together play a huge part in customer satisfaction. Unlike online stores, offline stores provide a great way of delivering customer service as it gives a human touch to the service, this helped them to overcome the competition. 
• Innovative Sales Strategy – The average electronic consumer does not have the whole knowledge about the product, they might find it difficult to make a decision just through knowledge provided online. Best Buy uses tech-savvy professionals and salespeople to provide them with the right knowledge and the right product. Thus gaining customer trust and increasing sales in their retail outlets. 
• Effective Cost Management – Through effective cost management, Best Buy can cut down their expenses and in the wake of 2017, they were able to decrease the cost significantly which helped them compete with the Online retail prices and are still moving forward towards cutting down the excessive cost.
• Convenience – Unlike Online stores, Best Buy has a variety of services such as exchange of products, warranty claiming and tech support on products for which they have a separate unit known as Geek Squad which helps with all the technical operations such as setting up the T.V., computers, gaming consoles etc, which makes it highly convenient for the customers.

2. Weakness of Best Buy

The Weakness section of Best Buy’s SWOT analysis comes next. Let’s look at Best Buy’s Weaknesses, which put the company at a disadvantage in some manner! 

• Restricted Locations – Best Buy has retail outlets only in the U.S., Mexico and Canada, this affects their potential market outside these countries as online retail stores such as Amazon, take advantage and capture the demand for electronic goods from the rest of the world. Because of lack of reach, their potential market share is lost and they miss out on the potential profit or sales. 
• Adherence to the same type of product – Best Buy focuses mainly on electronic products and appliances. Electronic products are useful currently and play a huge role in our lives but uncertainty in the market could lead to a decrease in demand for these products. Thus, an alternative product type such as essential goods retailing can be helpful in uncertain scenarios in the future and keep the company financially safe.
• Flexibility – After the rise of the internet the commerce platforms have changed drastically. Best Buy had lost a lot of sales in the past due to the rise of E-Commerce platforms. It has made a comeback but still, there is a great chance of downfall if they do not keep up with the trend and go digital.

3. Opportunities for Best Buy

Now we’ll look into Best Buy’s O in the SWOT analysis. We will learn about all of the options that will provide Best Buy with a competitive advantage. External circumstances that provide a corporation with a favourable environment in which to attain its purpose are referred to as opportunities. 

• Smart Homes – Smart homes concept have become a modern marvel. Technological advances have helped electronic products to link with our houses making daily life easy. Various products can now function to switch on and off the lights, change the temperature using voice automation, and many more…. Best Buy can seize this opportunity and increase its demand in the market.
• Corporate Relation Building – Through partnering up with brands such as Samsung, Sony, Apple etc. and exclusively selling the products they can cut the cost of the middleman and provide a lesser cost for the product. This way they can compete with the online retail prices.
• Market Expansion – The demand for electronic products is high all over the globe, if Best Buy can size up the required funds they can increase the number of their retail outlets and thereby increase their sales.

4. Threats to Best Buy

Let’s look at the Threats, which are external variables that negatively affect Best Buy!

• Fierce Competition – E-Commerce has created a competitive market for electronic products. Huge companies such as Amazon, Alibaba, and Walmart have capitalised on the market making it very difficult for retail outlets such as Best Buy to generate sales.
• The Pandemic – Covid-19 has highly affected retail brands around the globe. Some retail outlets even went out of business and got shut down or discontinued. Best Buy is still hanging tight in this situation, and are struggling to generate sales.
• Strike Risks – As the rise of the pandemic began more and more workers started strikes because pay cuts were caused due to lack of sales. This could highly affect Best Buy as the staff and sales personnel play a huge role in the sale of the goods.

A SWOT Analysis is an excellent way for huge multinational businesses like Best Buy to break down their operations and analyse management risks and advantages. The SWOT Analysis of Best Buy comes to a close with this.

Conclusion

Best Buy has become a strong pillar for retail outlets across the globe. They withstood all types of obstacles, from the great depression of the stock market to survive the rise of E-Commerce which has shut down a lot of retail stores. They have a great potential for success and the advancements in technology have opened new doors for the brand. Their major strength lies in customer service and customer satisfaction and the availability of stores in just specific countries is a great weakness for Best Buy.

When Best Buy ups its digital marketing strategies, it will gain not only from its cost-effectiveness, but will also reach a larger audience than normal via various channels such as SEO, emailing content marketing, and social media marketing. 

Mastering the fundamentals of digital marketing and completing Certified Courses might lead to opportunities to work with major stores like Best Buy. IIDE’s short-term certification courses in a variety of digital skills and knowledge that can get you up to speed in as little as five days. Short-term certification courses offered by IIDE in fields such as social media marketing, media strategy, and search engine optimization.

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