At Best Buy, the story line is no longer about defending itself against lost market share, competition from Amazon or even its very survival.
Instead, just as smaller rivals HHGregg Inc. and RadioShack filed for bankruptcy protection this year, Best Buy is growing. On Thursday, it reported a much better-than-expected Q1 profit and a 1.6% comparable sales gain, beating its own forecast for a decline.
In the US, comparable sales rose 1.4%. While neither the companywide nor US sales gains are earth-shattering, they are considerably stronger than the 0.1% increase the retail sector is expected to notch, according to Retail Metrics.
On the same day, video game retailer GameStop reported comparable sales in the US declined 2.4% while Sears said its namesake chain’s US same-store sales slumped 12.4%, led by declines in categories including appliances, a category where Best Buy said Q1 comparable sales gained 4.2%.
For Best Buy, the results reflect a significant turnaround. It had a string of comparable sales declines that ran from 2011 until 2014, according to Retail Metrics data. Since then, Best Buy has registered same-store sales gains in eight out of the past 11 quarters.
CEO Hubert Joly said in March that Best Buy has gained share across the majority of its categories. That's being borne out in third party reports. For instance, Euromonitor data showed total US electronics sales have declined in each of the past three years, but Best Buy, while lagging growth rate at some electronics sellers like Apple, has posted small gains in each of the past three years.
On the ecommerce front, where Best Buy reported a 22.5% jump in Q1 US online sales, there was some sign that it’s even taking share from Amazon. According to Slice Intelligence, Q1 online share of electronics at Amazon declined to 46.7% from 48.9% a year earlier, while at Best Buy the share increased to 8.9% from 7.8%. The Slice Intelligence data is based on online receipts from 1.63 million shoppers in its consumer panel.
Best Buy said both higher visits and conversion rates contributed to increased online sales, now representing 12.9% of its US total sales from 10.6% a year earlier.
Matching Prices, Beating Showroomers
Under Joly, who joined the company in late 2012, Best Buy has embarked on what it described as its “Renew Blue” strategy. He introduced a price matching strategy to keep from losing consumers who showroomed at Best Buy and then bought elsewhere, such as Amazon and Walmart. He also invested in training employees to reduce turnover and improve customer service.