Best Buy says customers lack urgency but are hungry
Battling excess inventory and a highly promotional environment for consumer electronics, Best Buy said holiday shopping habits were returning to some pre-pandemic norms.
FY23 Third Quarter Review finance during a Tuesday, Nov. 22, earnings call, the CEO of Best Buy Corie Barry noted a year-over-year decline in sales across most product categories, adding that the biggest impact on the sales slump came from computers and home theaters.
“At the highest macro level in retail, every customer makes trade-offs, especially with the significant impact of inflation on basics like food, fuel and lodging,” Barry told the Reuters. analysts on the company’s call. “Among consumers, we can also see that savings are decreasing, credit usage is increasing, and value clearly matters to everyone.”
As a result, she said, the Minnesota-based retailer continued to see more interest in sales events focused on “exceptional value”, calling the current macro environment “uneven and unstable” for retailers. consumers.
See also: Best Buy gets into hearing aids after FDA clears OTC sales
Anticipating that shopping habits will approach historic holiday norms for the first time in two years, Barry said: “We expect there to be more customer shopping activity focused on the week Black Friday, Cyber Monday and the two weeks leading up to December 25.”
Along with offering free next day delivery on “thousands of items” and bolstering in-store and curbside pickup, Barry said: “We’re confident as we approach what could be a season parties, and we have adapted our offers to delight our customers whatever their budget.
The digital shift is sticky
Barry said, “It is becoming increasingly evident each quarter that pandemic-induced shifts in shopping behavior are persistent and our domestic digital sales penetration will likely remain above 30%.”
She added that for the first nine months of the year, “our online sales as a percentage of national revenue were 31%, nearly twice as high as before the pandemic,” adding that “demand of customers for other virtual interactions remained high and we saw strong and sustained sales growth from our investments in chat, phone and video sales experiences this year.”
In Loyalty, she said the Totaltech membership launched a year ago for an annual fee of $199 “caused the behavior of members that we envisioned. Members are engaging with us more frequently and transferring their wallet share to Best Buy,” adding that “nearly half of new members who joined the program in the past year were either new or returning customers. customers, which reinforces that the value of Totaltech resonates beyond our existing loyal customers.
On payments, Barry called Best Buy “well positioned to meet customer needs in this environment, noting that the chain offers” several financing options to improve affordability. These include our co-branded Citibank credit card, buy-it-now, pay-later options and, most recently, our exclusive Upgrade Plus program for Apple MacBook.
Apple’s partnership on Upgrade Plus powered by Citizens Pay allows consumers to refund their purchases “for one low monthly fee” and redeem them for an upgrade after three years. It’s one of many supplier partnerships, including one with Whirlpool in the homebuilder space.
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Barry didn’t have much to say about Best Buy’s recent forays into healthcare, only noting the October launch of over-the-counter hearing aids in nearly 300 stores. “Volume is still relatively low, but the rate of sales growth in the third quarter exceeded our expectations and demonstrates that customers view Best Buy as a relevant supplier of these products,” she said.
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