A few years ago it seemed like Best Buy (NYSE:BBY) would be one of the casualties of the so-called "Retail Apocalypse." The chain had slumping sales, management questions, and customers were using it to look at purchases they later made with other retailers online.
Enter Hubert Joly in August 2012. The hiring of the former CEO of Carlson, a company in the hotel and restaurant space, was widely questioned. It turned out to be exactly what the retailer needed. Joly brought in "Renew Blue," a methodical plan designed to cut expenses, refocus the chain's stores, diversify revenue, and to paraphrase the CEO, to fix what was broken.
That phase has passed. Now the company has moved on to "Best Buy 2020: Building the New Blue." Joly and other executives discussed those next steps at its annual investors' day Sept. 19.
After acknowledging Best Buy employees impacted by the recent hurricanes in Texas, Florida, and Puerto Rico, Joly took a moment to salute what has happened over the past five years. He called the chain's path "a significant resurgence," and that has produced "market-leading returns and valuable insight."
The future is bright
Joly tends to be pretty clinical in his manner of speaking. Unlike many CEOs who push optimism with little foundation, the Best Buy boss consistently cited market studies, and analysis based on the past five years.
"Looking ahead, and we have taken the time as we have moved from Renew Blue to Best Buy 2020 to analyze the space, we believe we have the opportunity to operate in a strategically attractive industry that's full of opportunities," he said.
More than like
Joly acknowledged that in 2012 many Best Buy customers did not like the chain. He believes that's no longer the case, but that the next step for the retailer is to move from customers liking Best Buy to loving it.
"That will take investments," he said. "This will take developing new capabilities, and that's part of our plan."
Why invest in Best Buy?
As you can see from the chart above, Best Buy shares have more than tripled in value during the five years Joly has been in charge. The CEO addressed that and explained to investors why he believes significant upside remains.
"We're dealing with an opportunity-rich environment," he said. Joly cited the innovation that's going on in the consumer electronics space. He noted that those innovations provide opportunities to help educate customers, which opens a door for Best Buy.
Joly also said that the chain can expand what it sells, building upon its existing foundation. "We have a proven ability to execute," he added.
A competitive advantage
Joly believes that his company enjoys some competitive advantages over its rivals. He believes its key edge is Best Buy's ability to help customers online, in stores, and in their homes.
"The combination of digital assets and physical assets and the opportunity for us to not only help customers when they buy, but also when they use the technology is truly unique in the competitive landscape" he said.
Play to win
When Joly took over Best Buy's main goal was survival. Now that he has put the chain back on solid footing, with a strong balance sheet, he cited his company's ability to invest, and his desire to "play to win."
The CEO did not cite specific plans in this area, nor did he define what "playing to win" means, but throughout the event he talked about evolving Best Buy's capacities. That means continuing to improve its digital channels along with its service offerings in addition to continuing to improve its stores.
Doing the impossible
Had Joly not been hired, it's very possible Best Buy would not exist right now. Instead, the chain has become a model for what a retailer needs to be in the digital era.
Joly, perhaps because of his service industry background, fundamentally understands that stores can't simply sell stuff. He has made Best Buy much more than that. It's now a chain that not only sells electronics, but installs them, services them, and teaches people how to use them.
That's a more solid foundation than being the cheapest or most convenient. It's a recipe that builds the type of connection with consumers that should help the chain continue to grow in a market where so many other brick-and-mortar retailers have become victims.