Best Buy’s shares are flying high heading into Black Friday, harking back to a time in the mid-2000s when the retailer was still opening new stores and Amazon.com was seen as more of a curiosity than a major threat.
And smiling — at least, for now — is Best Buy CEO Hubert Joly, who delights in proving wrong the naysayers who thought the online juggernaut would put Best Buy out of business. To the contrary, he says there’s room in the market for both to win.
“Amazon is raising the bar,” said Joly. “We are clearly raising the bar. And I think it’s going to become harder and harder for others to compete — because the economics are very tough. You need to be really good at this.”
This will be Joly’s fifth holiday season as CEO of the electronics chain, overseeing one of the biggest turnaround stories in retail. During an interview at Best Buy’s Richfield headquarters, Joly discussed a wide range of topics from competition such as Amazon and holiday strategies to why its stores will be open on Thanksgiving.
The chain also has upgraded its digital channels and sped up its delivery, now getting more packages to customers’ doorsteps within two days.
Of course, Amazon hasn’t been sitting still, either. The online giant has extended its reach by adding millions more households to its Prime membership program through enhanced services such as new streaming content and two-hour delivery of everything from restaurant food to alcohol to last-minute holiday gifts through its growing Prime Now network.
Best Buy’s online sales have jumped 24% in each of the last three quarters and now account for about 11% of its overall sales.
Amazon and Best Buy currently control about 25 percent of the U.S. electronics market, Joly said. Down the road, he expects that other smaller players might bow out or de-emphasize electronics among the various categories they sell.
Peter Keith, an analyst with Piper Jaffray said “My view is they have eliminated the online threat of Amazon. It’s still there, but they’re not losing share to them anymore.”
Filed Under: Tech