Best Buy Lays Out Growth Strategy - High-Def Digest Forums
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Old 04-14-2011, 06:51 PM
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Default Best Buy Lays Out Growth Strategy

Thought this might be of general interest with the discussions around Best Buy HD sales and exclusives.

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Best Buy will focus on profitable growth categories including accessories, content delivery, subscriptions and services, and will reduce its big-box square footage by 10 percent over the next three to five years, as part of an aggressive plan to build its business.

The strategic growth strategy will be presented by senior executives to financial analysts in a day-long meeting at Best Buy headquarters today.

The pillars of the plan include:

tapping into the estimated $420 billion market for accessories, subscriptions and services, which is two-and-a-half times greater than the traditional CE hardware market. The company projects it will sell 10 million mobile phone, home and mobile broadband, and video service contracts this year;
  • doubling its $2 billion online business within three to five years in the U.S.;
  • building out its small-format Best Buy Mobile chain to upwards of 800 stand-alone stores within five years;
  • maximizing pricing and assortment to drive higher conversion rates and position Best Buy as a low-price destination, and;
  • improving store productivity and increasing "points of presence" while reducing its big-box footprint, resulting in as much as $80 million in annual savings.
http://www.twice.com/article/466783-...h_Strategy.php
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Old 04-14-2011, 07:01 PM
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More coverage:

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Faced with declining market share and comparable-store sales, No. 1 U.S. electronics retailer Best Buy Co. said it plans to cut its big-box store square footage, expand in online sales and grow in the nonhardware area including services and connections.
Quote:
The plan comes at a time when the company has lost market share in three of its largest categories where it has the market-leading position: televisions, computers, and digital camera and camcorders. There also has been growing concerns that the company can’t fill its large store base as music, movies and games have all moved to download businesses, Stifel, Nicolaus & Co. analyst David Schick said.
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As the company faces increased competition from retailers including Amazon.com Inc., Wal-Mart Stores Inc. and Target Corp. as well as consumers who increasingly check product prices using their smartphones, Best Buy said that it plans to expand in selling services, connections, content such as CinemaNow movie download service, and accessories, which together represent an industry segment that’s more than 2.5 times bigger than the traditional consumer electronics hardware market.
http://www.marketwatch.com/story/bes...egy-2011-04-14
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Old 04-14-2011, 08:29 PM
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The bolded part is pretty much what I've been saying. People are no longer buying physical movies like they were and moving to digital versions (streaming, VOD etc). This will likely cause Best Buy to continue to shrink the OD section at stores and move more profitable items into the areas.
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Old 04-14-2011, 11:15 PM
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Best Buy: Delays on DVD rentals boost sales

http://news.cnet.com/8301-31001_3-20...?tag=mncol;txt

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The agreement by Netflix and other top video-rental services to wait 28 days before renting newly released DVDs appears to be boosting disc sales--as much as 30 percent in some cases, say two national retailers.
Quote:
"On sales of specific titles, we've seen our market share go up over time and degradation of sales has slowed [as a result of the 28-day window]," said Allen Hughes, merchant director for Best Buy, the man who handles disc sales for the chain of consumer-electronics stores.
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Techies aren't' whole marketplace
"This isn't brain surgery," Marmaduke said. "We saw the impacts that 99-cent rentals had on sell through. It doesn't take a great leap to figure out how that affects business." Marmaduke noted that the sales-only window was much criticized by tech pundits and that there's been a lot written by the death of the DVD.
"DVDs are still a $12 or $14 billion business," he said. "What people from the tech world often do is confuse themselves with the entire marketplace."
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Old 04-15-2011, 12:07 AM
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Originally Posted by towergrove View Post
Best Buy: Delays on DVD rentals boost sales

http://news.cnet.com/8301-31001_3-20...?tag=mncol;txt
Cool. It is a win/win situation!

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A year after the Netflix-Warner deal was struck, some retailers say they're encouraged by the results. If the trend continues, Netflix might be able to use the sales-only window to pen similar agreements with other TV and film companies and that could help the company acquire more streaming content. In many tech circles, the thinking is that the Web will become a dominate means for film distribution.
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Netflix spokesman Steve Swasey said only a relatively small percentage of subscribers seek new releases. He remarked that the sales-only window provides the company with extra resources to acquire streaming content while also benefiting its suppliers, the major film studios.

But when you talk about the future of physical media, it's hard to imagine a comeback--at least to the lofty revenue numbers it once generated. For years, home video sales outpaced box office. At the same time, all the major players are staking out turn in Internet distribution.

Netflix is doubling down on Web streaming. Time Warner and Comcast are pushing TV Everywhere, a service that enables subscribers to view cable content over the Web. Google, Wal-Mart, Apple, and Amazon also compete in Web video.
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Old 04-15-2011, 01:02 AM
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Netflix spokesman Steve Swasey said only a relatively small percentage of subscribers seek new releases.
What a load of horseshit.

This Swasey dude must be trying to be the Jodi Sally of streaming.

He should have said "only a relatively small percentage of Netflix subscribers GET new releases."
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Old 04-15-2011, 08:24 AM
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Quote:
Techies aren't' whole marketplace
"This isn't brain surgery," Marmaduke said. "We saw the impacts that 99-cent rentals had on sell through. It doesn't take a great leap to figure out how that affects business." Marmaduke noted that the sales-only window was much criticized by tech pundits and that there's been a lot written by the death of the DVD.
"DVDs are still a $12 or $14 billion business," he said. "What people from the tech world often do is confuse themselves with the entire marketplace."
Thats been very true as Internet based tech writers and pundits naturally have that bias against packaged media.
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Old 04-15-2011, 10:06 AM
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Originally Posted by Kosty View Post
Thats been very true as Internet based tech writers and pundits naturally have that bias against packaged media.
It is more than just bias. Physical media is in decline.

Even with high volume, it is a bad idea to invest into a declining market unless there is a specific opportunity to take short term advantage of that decline (kiosks would be a good example). Even then, you need to have a transition plan as part of your business plan.

Even video games (via NPD) are going to start doing what the DEG does and track digital sales closer. Why? Without digital sales the gaming market is down. With digital sales, that market is up.


Quote:
“While new physical sales of video game hardware, software and accessories are down 1% in the first quarter of 2011, the trends we’ve measured with regard to growth in digital formats like full game and add-on downloads, microtransactions, mobile apps and social network gaming will likely result in net industry growth when we release our full measure of the first-quarter consumer spend on games in June,” Frazier said.
http://www.homemediamagazine.com/vid...wn-march-23674



Respect has to be given for physical medias sheer size. But ignoring the downward trends and not focusing on growth opportunities is a good way to manage yourself into a world of hurt.
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Old 04-15-2011, 10:10 AM
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Originally Posted by Kosty View Post
Thats been very true as Internet based tech writers and pundits naturally have that bias against packaged media.
Who wants to join the bandwagon that's been on the (massive) decline for five years?
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Old 04-15-2011, 10:41 AM
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One thing to observe or anticipate the decline.

Its another thing to say physical media was doomed even before Blu-ray was launched.
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