For those who are too young to remember the Great Electronic Retail Wars of the 90’s, there was some intense competition between several national and local electronic retail stores, which included Radio Shack, Circuit City, and Best Buy. Before Amazon and online buying became the norm, these national and local outlets made scads of money selling everything from CDs, DVDs, and video games to corporate printers, flat screen televisions, and all things techie.
The general consensus is that Best Buy won because it had an actual long term business plan. Owners of other electronic retail companies did not believe consumers would have non-physical data storage (such as the cloud) available to them. Back then, a 56k modem was the norm and most networks in businesses and at home had lots and lots of cables to deal with. Best Buy decided not to believe that all things would remain the same, and when market conditions changed early it was willing to take losses on inventory that would shortly become obsolete.
That is the basic reason why Best Buy is the lone man standing, but even now some question whether its best days are behind it. This list will direct you to some lesser known information about the company, including some events from its past and others of more recent vintage. It covers more than 50 years of the company’s presence in the retail world, so it has been through a thing or two. Instead of waiting to find out if the naysayers are right, here is a list of 20 Things You Didn’t Know About Best Buy to consider before you render your own verdict.
1. Best Buy had owned a record store and a music-piracy website.
We just through talking about Best Buy willing to admit its mistakes, but didn’t get specific. Here is the first of several boondoggles that could have cost the retailer dearly. In 2001, everyone was buying into music in general: DVD concerts, CDs, and even vinyl. The problem was that music piracy was becoming popular as the technology of peer-to-peer networking became more popular. Its choice of record store was Musicland, which had brand recognition at the time. Its choice of music piracy website was Napster. These brand names may have nostalgia attached to them, but in terms of profitability they were bad enough to be dumped by the company in only a few years.
2. Speaking of nostalgic, the company went retro on its initial choice for a company name
We are not talking 2018 retro but 1980’s retro. It’s choice? “Sound of Music” It was the original name of the company went it first popped up in 1966. Now that might be great of the only thing you are selling is music, but as we just saw, that idea didn’t work out very well. 17 years later it changed its name to Best Buy, and instead of focusing on music it created a superstore plan that resulted in its current success. But there was another cosmetic change that would take place that would cement the brand of the company in the mind of the public for decades to come.
3. During the Great Electronic Retail War, the liquidation of a competitor was not always a victory for the company
When competitor Circuit City went belly up and closed its more than 500 stores, it was natural to think that it was a huge victory for Best Buy. One less major competitor. But that liquidation ended up being a precursor for the general state of the economy – which was south. By the end of the year, Best Buy had seen it sales slump during the all-important Christmas and holiday season. It took a year for the company to return to significant profitability. The lesson here is that not everything is as it seems, so be sure to look beyond the obvious.
4. In 2016, Best Buy customers saw Christmas come early
Remember that 1966 date of the “Sound of Music” brand name disaster? Well, the specific date of the company’s origins was August 22, 1966. 50 years later, it had what amounts to a Black Friday sale to celebrate its 50 years in business. You have to suspect that sales would have been even higher if they had waited a few months before starting their business as many people are on summer vacation and the student loan money has yet to be put on the books. But 50 years is a very long time for a business to exist.
5. A former CIA agent was hired to keep tabs on you.
Well not in a privacy invasion sort of way, but Bill Hofmann (presumably his real name) served as a CIA intelligence officer for 8 years. Best Buy managed to convince him to work as their Senior Vice President of Consumer Affairs for three years, hiring him in 2010. Who else better to have around to interpret the hidden motivations of people than a government intelligence officer? After those 3 years as Senior VP he moved on from Best Buy, so for those who are just a bit paranoid, you can relax. We think.
6. Geek Squad revelation – part one
There are actually two separate and distinct parts to the Geek Squad: the repair techs who actually work on the equipment and those who you meet when shopping around at the store. According to more than a few former employees of Best Buy, the repair techs are top notch. That might be hard to believe if you have had to deal with the counter people at a Best Buy, but remember that they are the front piece of a multi-pronged system. Consider them to be the monitor of your computer. All you care about is if it looks right.
7. Geek Squad revelation – part two
This front piece of the Geek Squad are more commonly known as the counter help, and there is a 99% chance you will not be talking to an actual tech. From a consumer view you might think you are getting cheated, but the truth is most customer questions and issues can be answered without talking to an actual tech. Best Buy recognizes that there are people who always want to talk to someone “in the know” but from a technical viewpoint the vast majority of those customers can’t keep up with the actual repair techs. The importance of this two-layer approach is one thing that gives the Geek Squad its reputation.
8. Protection plans and accessories make up for losses on hardware
Some of you may have suspected that protection plans are not all they’re cracked up to be (though an equal number are more than glad they had bought one) but accessories? Aren’t accessories what make the digital experience fun and useful? They may do that, but given that the average computer sale at Best Buy will lose them 2%, the difference has to be made up somewhere. You may buy a new computer every 3 years or so, but are far more likely to stop in at a Best Buy to get a new storage device or cable. It might not seem like much money to spend, but in the eyes of Best Buy there are still 100 pennies in a dollar.
9. The company is heavily involved in electronics recycling.
Whether it is a cell phone charger cable or an old printer that has crapped out, the tendency of many people is to heave it into the garbage. Best Buy has created a partnership with Electric Recyclers International, a California company that specializes in the recycling of electronics and technology. Best Buy will gladly accept your old electronics for recycling, so they are doing their part to contribute to a cleaner and safer environment without all the hullabaloo. It’s one of these facts you definitely should know.
10. About 5 years ago, the company was on the financial ropes.
It is pointed out over and over that the company learns from its mistakes, and we’re not talking 30 years ago. In 2012 Amazon was continuing to push around virtually every brick and mortar retail store, and Best Buy was no exception. It was facing the continued obsolescence of CDs and DVDs, and there were internal issues such as a former CEO admitted to having an intimate relationship with one of his employees. Many of its stores were losing money, and the company’s long term future was in serious doubt. The problem was fixed quickly by beginning the now common retail practice of price match guarantees.
11. There is no shortage of luck in the company’s success story.
It is always good to say that a business made the right decisions, has a solid business plan, etc. that was key in determining its survival – or fate. Best Buy, when you look back at its 50+ year history, has had a number of very fortunate things happen to it. First, it competitors in the Great Retail Electronics War folded like a cheap suit. But then there are the products it sells, big ticket items like big screen televisions and higher end electronics that the smart consumer will want to get a good physical look at before plunking down a few thousand dollars. The fact that major suppliers and manufacturers like Samsung continue to sell to Best Buy and churn out what seems to be an endless supply of new electronic gadgets keeps the company’s profit margins steady. If you want to buy a Vizio or Emerson quality product you can go over to Walmart. Some people may say they are smarter than luckier, but other items on this list tend to show otherwise.
12. Best Buy won Forbes “Company of the Year” award in 2004.
So many companies, large and small, rise and fall within a calendar month that it is truly amazing a company like Best Buy has survived. The award it earned back in 2004 was no fluke though. The same basic company philosophy it had back then still exists today. Two major factors enter into this award that hold true today – making this award relevant today. First, it has been able to adjust to market conditions. There definitely were surprises in its history – the Great Retail Electronics War and Amazon’s online sales juggernaut – yet it hired the right people to sidestep most of the landmines. But what had to accompany those adjustments was the ability to execute the plans necessary to guarantee its survival. The award is important and obvious, but it is the reasons for the award that most people don’t know about.
13. A tornado changed the future of the business.
Such is the stuff folklore is made of, but that is a story surrounding the company’s transition from “Sound of Music” to Best Buy in 1983. A tornado has struck one of its 9 existing stores and the company did the normal thing – advertise a sale to recoup as much of the losses as possible. What the owner noticed was that not only did people flock to the sale, but their attitude was much different dealing with the company employees. It was more relaxed and friendly, resulting in the change from a hard sell, bottom line approach to a more customer oriented approach. The commission for salespeople was restructured so the customer would be the focus. (Does that sound familiar?) This is what is referred to as turning a lemon into lemonade.
14. Beware of the TRE.
For those who don’t know, the TRE is The Retail Experience and a recently adopted return policy practice instituted by Best Buy. The company hired this 3rd party business to address the continuing rise in return rates that was costing the company significant dollars. There are 7 factors that can actually prevent you from having a refund request approved. Those factors are:
- making too many returns in a short timeframe
- returning items without a receipt
- returning items that are often stolen
- returning items after a certain period of time
- returning items at store closing time
- returning high-value items
- returning a large percentage of your total purchases
You have been put on notice.
15. The company had its first investors meeting in 5 years in 2017.
Whether this is unusual depends on the state your company is headquartered. If you are wondering why Best Buy left its California roots and headed to Richfield, Minnesota, the answer may be in the more flexible business laws. Many states require an annual investor’s meeting, but Minnesota’s is written: “Regular meetings of shareholders may be held on an annual or other less frequent periodic basis, but need not be held unless required by the articles or bylaws or by subdivision 2” which is a demand by the shareholder. 2012 was the year of revitalization for the company, and none of its investors seemed particularly concerned about the direction of the company or its management. Maybe there is something to be said about letting company management run the company instead of social media and media opinion.
16. Best Buy is strictly a North American company.
Though opening up satellite stores in other countries in the global business model, Best Buy only has brick and mortar stores in Canada and Mexico. It has ventured out a few years ago and opened up 9 stores in China, but the economic and political realities had the company shutting those stores a few years ago. Even supplying a Chinese company with limited electronic products has not worked out, which may be one reason corporate investors have limited prospects for the company’s future growth.
17. In 2012, the company’s bond rating was seriously headed to junk bond status.
The corporate credit rating agency Standard & Poors moved to put Best Buy’s corporate credit rating on a credit watch, with the possible downgrade to “junk” status in April, 2012. The reason was that a CEO scandal involving an inappropriate relationship (the term applies both then and now) was causing a crisis in investor confidence. That issue was stacked on plummeting store sales and a general overload of unmovable inventory. The house was cleaned up internally by the forced resignation of the CEO and a certain Mr. Joly was brought in to clean up the sales mess.
18. Best Buy’s corporate vision is “People. Technology. And the pursuit of happiness.”
This can actually be written as an equation for success for many companies today. What can go unnoticed is that Best Buy (and many other companies for that matter) are not in the business of necessarily making your life better. They are primarily concerned with your happiness. Given the state of technology and the relatively low expectations from consumers of the quality and usefulness of new technology, Best Buy is on solid ground. No one wants to buy a piece of technology that will actually make them work harder, but they will but something that makes their work easier and more fun. Don’t lash out at best Buy for their vision – they are only giving people what they want.
19. The Best Buy logo has only been around for about 25 years.
Many people think that its yellow sales tag logo has always been around, but the actual change came in 1991. If you think branding is unimportant, the company changed its logo after recognizing it was a major player in the electronics retail game, topping $1 billion in value. Its old logo was cluttered and confusing, and hardly memorable. Given that the company has been around for more than 50 years, it means that Best Buy has a third rate logo for more than half of its existence. The current price tag logo always suggest “sale” and customers are drawn to its simple and easy to remember company name.
20. The company recently switched its business model from sales to problem solving.
For a brick and mortar store, this is definitely a challenge because anyone can see that just getting people into the store is difficult, let alone getting them to plunk down money instead of running out of the store to go home and buy it online. In this age of connectivity, Best Buy marketers know that a customer is not likely to want to know about a piece of technology, but how they can use it to connect to other devices or platforms. That means everyone who deals with customers has to have a problem solving mentality. In today’s market, connectivity means mobile devices, and the store has spent more time and resources increasing its online presence.