Best Buy

Best Buy

Best Buy did not “buy” their reason for success, and it cost them dearly 

Best Buy succeeded where other stores failed. But when they opened in new markets they didn’t repeat their successful action, and it cost them. Any business owner would benefit knowing how they lost their way.

 

In today’s internet age, brick-and-mortar stores are closing their doors at a speed not unlike how saddle shops shut down after the invention of the car. 

Many call the closings of brick-and-mortar stores the “Amazon Effect.” 

There is one retail store, however, that is not only surviving the Amazon Effect but is continuing to grow at a good clip—and that is Best Buy. Best Buy mostly sells electronic devices: computers, TVs, printers, phones, etc. 

Most items that you can purchase in Best Buy’s 1,509 stores1 you can also purchase online at competing websites. This, of course, is precisely why many brick-and-mortar stores are biting the dust. People today often shop with their smart phones in hand. They find the item they want in a store (such as Best Buy) and then compare the price to online stores and . . . Ouch! Yet despite this modern method of shopping, Best Buy keeps galloping along without a hint of slowing down—at least in the U.S., but not in foreign lands. And therein lies the point of the story.

The actor Robert Redford once said, “Success is a tricky mistress.” Perhaps it’s “tricky” because success can intoxicate a business owner (or an executive board) into believing they can do no wrong. Perhaps that is what happened to Best Buy.

Best Buy’s Major Blunder

After achieving sustained success in the U.S., Best Buy did what many thriving U.S. brick-and-mortar businesses do: they ventured out beyond the U.S. shores into Europe. And why not? If McDonald’s and Ford could succeed abroad, why couldn’t Best Buy? 

Originally, Best Buy had planned to open 200 locations throughout Europe. Then they scaled their plans back to 100, and finally they ended up opening only 11 stores.2 

They called it quits after those first 11 failed.

Ironically, one of the major reasons for Best Buy’s failure in Europe is they neglected to do the exact thing that helped them succeed in America. 

In an article written September 2, 1979, titled “SURVEYS ARE THE KEY TO STATS,” L. Ron Hubbard stated: “To find out what people want or will accept or will believe, one does SURVEYS.”

The definition of survey is “to view in detail, especially to inspect, examine or appraise formally or officially in order to ascertain condition, value or information.”

Surveying falls under the category of market research. One could say the act of surveying is for a business to become customer centric—which means creating a positive experience for the customer.3 Another way to think about it is looking at one’s business from the outside in rather than the inside out—or through the lens of the customer rather than the producer.4 It’s about understanding what people want or will accept or will believe and then providing a solution based on those wants. 

Becoming customer centric is one of the key reasons Best Buy has survived in the brick-and-mortar electronics space in the U.S. while a company like Circuit City has not. Early on in its development, Best Buy took the time to survey and understand its public and what that public wanted.4

Mr. Hubbard defines public this way: “‘PUBLIC’ is a professional term to PR people. It doesn’t mean the mob or the masses. It means ‘a TYPE OF AUDIENCE.’” 

Best Buy apparently failed in Europe because they didn’t understand this new and different PUBLIC. According to Business Insider: “Best Buy should have known better—and done as much research on its European customers as it did a few years ago when it launched its stores in the U.S., targeting a very specific demographic with each store.”5

If Best Buy had done their market research, they may have found that unlike Americans, Europeans only buy electronics a few times a year and prefer to buy from smaller stores. 

Get Expert Advice from the Only People That Matter

Surveying enables a business to know before they go. It brings to light data that allows a company an entrance point into a “foreign land,” whether that land is a new geographic location or the “land” between the ears of consumers. 

To no small degree, Best Buy found success in the U.S. through market research. In Europe they abandoned or short-cut the research step. Success is a strange mistress perhaps because along with it comes an inflated ego that causes a business to believe it no longer needs to do what it had done to achieve success. If one is not careful, success can cause one to look at things from the inside out rather than from the outside in.

The moral of the story is to always remain humble enough to turn to the experts for advice. The experts are your customers and potential customers. Discover what public will purchase your services and find out what they need and want through surveys. They will advise you on exactly what to do to make them buy. Market research is what Best Buy did best, and then what they failed to do.


References  

  1. “Total Number of Best Buy Stores Worldwide 2010 to 2018.” Statista.com, n.d. 
  2. Groth, Aimee. “A Closer Look at Why Best Buy Failed in Europe.” BusinessInsider.com, 8 Nov. 2011.
  3. “Customer-centric.” BusinessDictionary.com. WebFinance, n.d.
  4. Gulati, Ranjay. “Inside Best Buy’s Customer-Centric Strategy.” Hbr.org. Harvard Business Publishing, 12 Apr. 2010. 
  5. Groth, Aimee. “A Closer Look at Why Best Buy Failed in Europe.” BusinessInsider.com, 8 Nov. 2011.