Best Buy Strategy
1) Following are the key features of various elements of Best Buy’s Big-box retail model:
Pricing(1): Recently in 2013, Best Buy claims to have “Everyday Low Pricing” and “Price matching” strategy to get consumers to shop during non-promotional events.
Merchandising/Assortment: Focused on Consumer electronics, home office equipment, entertainment software, and appliances. No longer follows one-size-fits-all approach. Giving up the idea that Best Buy stores had to have similar product mixes and layouts. Each store would carry products for all the segments but focus on one or two of the demographic groups.
Store Location & Count(2): 1,150 stores in United States, Canada, Europe, and China.
Distribution: The nimbler network put more emphasis on distribution centers located closer to retail outlets. At present imports from Asia- where most products are sourced- are consolidated in large centers. These facilities feed large distribution center and smaller home-delivery centers. The streamlined network will channel more loads to smaller facilities. In addition, some Best Buy suppliers are using a process known as collaborative planning, forecasting, and replenishment (CPFR) that automates replenishment by linking suppliers and buyers.
Inventory Planning and Execution(3): Best Buy managed to improve in-stocks across the board, even as inventory levels continued to decrease. It was possible because of following reasons:
Better Forecast: Initially it used to have multiple forecasts from internal departments and from outside parties. The retailer has now moved towards “one source of truth”, combining data from departments and partners into a single consolidated product forecast. Use of softwares such as “Oracle Retail Demand Forecasting” and “Oracle Retail Advanced Inventory Planning” also improved forecasting. Serve Local Market Need: Best Buy store employees have greater flexibility in changing the floor layout or overriding an inventory management plan so
Pricing(1): Recently in 2013, Best Buy claims to have “Everyday Low Pricing” and “Price matching” strategy to get consumers to shop during non-promotional events.
Merchandising/Assortment: Focused on Consumer electronics, home office equipment, entertainment software, and appliances. No longer follows one-size-fits-all approach. Giving up the idea that Best Buy stores had to have similar product mixes and layouts. Each store would carry products for all the segments but focus on one or two of the demographic groups.
Store Location & Count(2): 1,150 stores in United States, Canada, Europe, and China.
Distribution: The nimbler network put more emphasis on distribution centers located closer to retail outlets. At present imports from Asia- where most products are sourced- are consolidated in large centers. These facilities feed large distribution center and smaller home-delivery centers. The streamlined network will channel more loads to smaller facilities. In addition, some Best Buy suppliers are using a process known as collaborative planning, forecasting, and replenishment (CPFR) that automates replenishment by linking suppliers and buyers.
Inventory Planning and Execution(3): Best Buy managed to improve in-stocks across the board, even as inventory levels continued to decrease. It was possible because of following reasons:
Better Forecast: Initially it used to have multiple forecasts from internal departments and from outside parties. The retailer has now moved towards “one source of truth”, combining data from departments and partners into a single consolidated product forecast. Use of softwares such as “Oracle Retail Demand Forecasting” and “Oracle Retail Advanced Inventory Planning” also improved forecasting. Serve Local Market Need: Best Buy store employees have greater flexibility in changing the floor layout or overriding an inventory management plan so