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In Hard Times, Is Best Buy's Best Good Enough?
source: New York Times


Amy Adoniz, at the center of the table, with her employees in the break room of the Best Buy store she manages in Manhattan.
Chester Higgins Jr./The New York Times



In a down economy, the biggest challenge for Best Buy may be from discounters that are chasing its core base of gadget-happy consumers. Best Buy's Best Good Enough?

"Wal-Mart, Costco and Target have expanded their assortments," says Steven L. Martin, who manages Slater Capital Management, a retail hedge fund. "Five years ago if you said Wal-Mart would sell plasma TVs, no one would have believed you."

Best Buy also faces stiff competition from retailers like Amazon that do business exclusively online. The company is fighting back by allowing shoppers to make purchases online and then pick them up at Best Buy stores, which eliminates shipping costs. "Out of this storm comes new operating models," Mr. Dunn says. "The ecosystem is going to change. We see storefronts closing."

For now, though, Best Buy has a potent weapon in its battle with the discounters and online sellers: its staff. Members of Best Buy's sales staff, a k a "Blue Shirts," go through a 20-hour training program, then spend two weeks shadowing an experienced sales staff member around the floor. Historically, the Best Buy training program has been so strong, some people in the industry say, that competitors often waited for Best Buy to let staff go after Christmas, and then snap them up.

Ms. Di Folco, the actress, says: "Most of the time, I find really informed people who can actually answer my questions. It's like they seem to be electronic junkies versus kids wasting time at a part-time job they don't enjoy."

Its sales force may give Best Buy a competitive advantage even in a holiday season when many customers are interested in rock-bottom prices.

"The importance of the salesperson is directly related to the price of the product being sold," says Chris Denove, vice president at J. D. Power & Associates, the consumer research firm. "If you're talking about toothpaste or pencils, the salesperson is immaterial, but when you’re talking about high-end electronics such as flat screen TVs, the salesperson can be critical."

Target, meanwhile, is going after the technical support business - a big profit center for Best Buy - and has hired Zip Express, a company started by Chris Mauzy, a former Best Buy employee, to challenge the "Geek Squad" for which Best Buy is known. For a fee, members of the Geek Squad will install your purchase and provide technical support, even on products not bought at Best Buy. It's a huge profit center for the company.

Mr. Mauzy, who left Best Buy to start Zip Express in October 2007, is introducing an electronics-installation service for 200 Target stores.

To further protect itself against inroads from the discounters, Best Buy is trying to make shopping more appealing to women. Its Omega Wolves program, a focus group made up of 3,500 working women in the United States and London, has a page on Facebook; Omegas socialize and give the chain feedback. Thanks to the Omegas, Ms. Adoniz's store has what she calls "nicer fixtures," like wood-trimmed displays and lighter backdrops.

Ms. Adoniz's store also aims to stock accessories with women in mind: fake leopard skin and red crocodile cases for BlackBerrys and other gadgets from Liz Claiborne, Betsey Johnson, Dooney & Bourke, Tumi and Steve Madden. Crystal Stroupe, a personal shopper and an aspiring opera singer, spends much of her time at Best Buy keeping the accessories table neat and pretty.

Ms. Adoniz says the accessories table brings a lot of astonished looks, "but we know the female shopper was an underserved market." Best Buy says women are now spending more money at its stores than men, which has led Ms. Adoniz and managers of other stores to expand accessories aimed at women. Many Best Buy stores now carry items like blow-dryers, curling irons and hair straighteners, as well as pink cameras and phones. "We have a whole personal care section and it does very well," Ms. Adoniz says.

The effort to appeal to women may ultimately help Best Buy distinguish itself from traditional electronics retailers, which tend to market electronics to men.

"You can't assume that every expensive TV is going to be bought by a male," says Matthew J. Fassler, a retail analyst at Goldman Sachs. "Women need to be served as intently as men."


   







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