Best Buy (NYSE:BBY) is still tuned into the growth channel and watching its profits soar. The retailer recently reported soaring Q3 sales growth as people snapped up products that helped them work, connect, and learn from home.
Those gains mainly came from the chain's surging e-commerce platform, which often pairs a digital order with a trip to the store for curbside pickup. In a conference call with Wall Street analysts, CEO Corie Barry and her team explained why they think that the multichannel approach will be a big part of the holiday season. It will likely remain a favorite shopping strategy for consumers well after the COVID-19 pandemic threat passes, too.
Here are some highlights from last week's chat.
Spending less on travel and more on the home
Our comparable sales grew a remarkable 23% as we leveraged our unique capabilities -- including our supply chain expertise, flexible store operating model, and ability to shift quickly to digital -- to meet what is clearly elevated demand.
Best Buy's 23% comps spike pushed sales growth beyond investors' already-high expectations. The standout platform was e-commerce, which jumped 174% year over year. But management said its multichannel operating approach made the key difference.
By allowing shoppers to choose how they wanted to interact with the business, including through fast home delivery or curbside pickup, the retailer was able to win more than its fair share of a booming market for home appliances and consumer tech. This spending came at the expense of normally significant monthly spending in areas like travel and eating out.
Enjoying the pickup visit
We have created what we believe to be an industry-leading store pickup experience that our customers value and now expect from us.
Best Buy scored high in customer satisfaction in recent months, in part by helping shoppers feel safe in stores even as pickup demand surged. Executives credited innovations like their robust curbside fulfillment platform.
Best Buy pushed most of the demand for hit launches like new video game consoles to that segment, for example, and management called the move a huge success in terms of maintaining social distancing while handling surging sales volumes.
There's no going back
Customer shopping behavior will be permanently changed in a way that is even more digital and puts customers entirely in control to shop how they want.
Best Buy is convinced that these demand shifts will stay even after the pandemic threat fades. But they'll likely also dramatically impact market share over the holiday season by pushing demand toward retailers that can handle flexible fulfillment options like same-day delivery and in-store pickup.
That judgment has the company making the unusual move of remodeling many locations even as the holiday shopping spike starts. "Normally," Barry said, "we would not remodel any stores this close to the holiday season."
But management says it is "imperative to move quickly" in transitioning stores to act like fulfillment hubs that promote today's most popular merchandise categories around home entertainment, work, and play. That's the best path the chain sees toward maintaining its positive growth momentum through the competitive holiday shopping season.