From the market high on February 20 to the market low one month later, shares of the S&P 500 fell 35%, and Best Buy (NYSE:BBY) stock fell 45%. That's not exactly the kind of performance you'd expect to see at the nation's best-known brick-and-mortar electronics retailer.

It was an especially steep fall-off given what we learned last week -- that even as the economy collapsed into recession, Best Buy retained more than 80% of its sales from the previous year. As nearly 100% of the U.S. population was subjected to the Great Lockdown, a combination of online sales and curbside service held Best Buy's sales decline less than 20%.

Thanks in part to Best Buy's quick thinking, and its role as an "essential" supplier of the electronics needed for many employees to work from home, shares of the big box electronics store rebounded strongly, and Best Buy stock has bounced 52% off of its March lows. Will this recovery continue? Will Best Buy shares continue to climb? That depends very much on what Best Buy, the business, will look like a year from now.

And that's what we're going to try to figure out today.

Best Buy banner display

Image source: Best Buy.

How COVID-19 changed Best Buy

Coronavirus caught America by surprise, and just like the rest of us, it took Best Buy a bit of time to figure out just how it should respond to the pandemic. After initially shortening store hours and stepping up disinfection procedures in early March, Best Buy ultimately decided to switch to an online/curbside service business model for the duration of the crisis. 

And here's the thing: It worked!

As CEO Corie Barry explains, "On March 22nd, we proactively moved all our stores to a contactless curbside-only model, allowing us to safely serve customers and comply with government orders and recommendations. We also halted all in-home installation, repair and consultation services choosing to leave the product at or near the doorsteps." And yet, event with the changed procedures, Best Buy still saw "a surge in demand for products that people needed as they complied with stay-at-home orders."

Ultimately, Best Buy "retained 81% of last year sales during the last six weeks of the quarter as we operated in the new model ... even though not a single customer set foot in our stores."

Phase 2 for Best Buy

Now, with the coronavirus epidemic apparently slowing down, Best Buy is ready to shift into the second phase of its pandemic response: evolving to meet the needs of a changed world.

On May 4, Best Buy began cautiously reopening, and admitting customers into the store "by appointment only" to enjoy "a new consultation service ... where they can get advice tailored to their specific tech needs."

Three weeks later, 70% of Best Buy stores, or about 700 locations, are offering such "consultations," even as Best Buy continues to offer online shopping and curbside pickup at these stores, and most of the company's other stores. At the same time, says Barry, "we are also back in customers' homes providing valuable services like large product delivery, installations and in-home repairs in approximately 80% of US zip codes."

The future for Best Buy

And while some might hope things eventually return entirely to "normal," Best Buy seems pretty pleased with how this new normal is working out.

"We believe many of the customer behavior changes resulting from this time of stay-at-home orders will continue to exist moving forward," confides Barry. "Work from home [will become] a more sustainable practice," as will e-learning for students, both of which could drive demand for more electronics gear from Best Buy. And seeing as "more than 83% of [customers] surveyed indicat[ed] they are extremely" happy with the new online shopping-cum-curbside pickup system, that should be OK with Best Buy.

In fact, more than OK. Right now, it appears Best Buy can "retain more than 80% of our revenue" with "approximately 82% of our full-time store and field employees on our payroll, including the vast majority of in-home advisors and Geek Squad agents." And if this is the case, Best Buy may already be right-sized to thrive in the new normal, permitting it to resume growing from here.

How fast might Best Buy grow? Well, consider that "domestic online growth [hit] 155% for the quarter ... and during the six weeks [that] we ran our curbside-only model, domestic online sales were up more than 300% compared to last year. Almost 50% of those sales were from customers choosing to pick up their products curbside at our stores," with the balance of sales being delivered direct to the customer at home.

Going forward, Best Buy says its "strategy" will be to employ its "unique combination of tech and touch to meet everyday human needs and build more and deeper relationships with customers." Sales will initiate online or at a consultation in-store and be handed off either curbside or at the customer's home, and then Geek Squad techies will visit the customer to iron out any glitches.

Current staffing seems sufficient to support this model, and if sales grow over time Best Buy can add staff to support that growth. As for the stores themselves, capital budgets can be shaved by repurposing space that is currently used for retail display to support using of stores as fulfillment centers, bases for "consultation" services, and hubs for the dispatch of Geek Squad workers.

So if I had to make a prediction, this is my best guess at where Best Buy will be one year from now.