NEW YORK (Reuters) - Best Buy Co Inc (BBY.N) has completed a five-year turnaround and is ready to compete with market leader Amazon.com Inc (AMZN.O) to prove U.S. retail is not a “winner takes all” situation, Chief Executive Hubert Joly told Reuters on Friday.
Brick-and-mortar retailers like Best Buy have closed stores and some have gone out of business over the past few years in the face of online competition and the decline of American malls.
The largest U.S. consumer electronics retailer is attracting customers again, Joly said in an interview.
“We have turned around the business, it’s about where we go from here,” he said. “We have not only survived but thrived and I don’t believe this is a winner-takes-all market.”
For the last five years the Richfield, Minnesota-based retailer has invested in price-matching, faster delivery, improving the search function on its website and better customer service to draw in shoppers to its stores and website. In the latest holiday quarter, Best Buy posted its best sales in a decade, boosted by a rebounding economy and stronger consumer confidence, and projected sales above Wall Street estimates.
The retailer’s share price is up 271 percent over the past five years, closing at $73.82 on Friday. The S&P is up about 75 percent in that time.
Best Buy’s appliance and home theater business has benefited from the bankruptcy of competitors RadioShack and HH Gregg Inc and tumbling sales at Sears Holdings Corp SHLD.O, Joly said.
Best Buy has about 15 percent of the U.S. consumer electronics market. Along with rival Amazon, the two retailers have about 25 percent market share, leaving room to grow, the executive said.
The company is betting on new services under its In-Home Advisor and Total Tech Support programs, which offer tech help to shoppers in an effort to boost sales. It is also opening warehouses near urban markets to speed online delivery.
Investments in employee pay and training and other initiatives have resulted in a drop in worker turnover to about 30 percent from 50 percent to 55 percent about three to five years ago. Store managers are also staying on the job much longer, he said.
Reporting by Nandita Bose; Additional reporting by Vanessa O'Connell and Anna Driver; Editing by Bill Rigby