Panos Mourdoukoutas
Nov 19, 2016

Once, Best Buy’s superstores were ruling the ‘bricks and mortar’ consumer electronics retail world. Its revenues, profits and stock soared, drawing the attention of business strategists and stock analysts.

Then came Amazon.com, changing the rules of the game. Best Buy’s superstores turned to liabilities. In what came to be known as “show-rooming,” customers window-shopped at Best Buy, but did their actual shopping at Amazon.com — which offered better prices than Best Buy.


Best Buy Co., Inc. (BBY) Stock Price


Best Buy’s revenues, profits, and stock headed south. Amazon’s fans discounted the slow death of the company.

But nowadays, Best Buy BBY +11.12% is still in business – and rising. In fact it is reporting one blockbuster quarter after the other, helped by a sharp rise in on-line sales.

Wall Street has taken notice, sending Best Buy stock back to the low 40s.

Best Buy’s revival isn’t accidental. It is the result of a smart strategy — Renew Blue – which has helped the company fix its business model to compete effectively against Amazon.com.

Best Buy capitalized on the benefits of scale and location — in two ways. First, it introduced a matching prices policy, helped by a push by states to have on-line retailers collect taxes, narrowing the gap between on-line and in-store sales.

Second, it introduced the concept of stores-within-stores; with Korean electronics giant Samsung and Microsoft opening their own stores within Best Buy stores—in essence shifting the cost of show-rooming to these manufacturers.

http://www.forbes.com/sites/panosmou...ve-and-rising/