Breakout

4 Reasons Best Buy Is Winning Back Consumers

Jeff Macke
Breakout

The widely held view is that America is destined to become a nation of shut-ins, mindlessly ordering products online then waiting for the UPS truck the way a dog waits for its master. Nothing of the sort is true. Good old-fashioned brick and mortar stores have a place in the future.

In the attached clip, retail whiz Brian Sozzi of Belus Capital Advisors takes us on a tour of rejuvenated electronics retailer Best Buy (BBY) to lay waste to the myth of online retail dominance.

Best Buy has come storming back from the brink by combining old school retail and online modernity. "What I always say about retailers is the truth is told in the stores," Sozzi explains, "from the products executives order, to the 19-year-olds that bring it to the floor, you can see the transformation in real time." The trick to seeing it is knowing what you're looking for in the stores. Sozzi exposes four of the methods to Best Buy's magic comeback.

1) Old-fashioned eye candy with a modern twist

Studies show more than 90% of shoppers turn right when they walk into a big box stores. Really. When you walk into a Best Buy and turn right, you might not even notice it but Best Buy has what Sozzi calls "eye candy" everywhere. Maybe even more importantly it's modern product.

"When you walk into the store do yourself a favor and look to the right," he suggests. "You'll see signs for Netflix (NFLX), Twitter, Skype. These are products you use in everyday life." Not just in life but online as well. You're not walking into a museum when you go into a Best Buy. You're going someplace fun.

2) Clearance zones

Nothing says "flea market" like the bins of discount DVDs you used to find tucked into the back of retailers. Blockbuster rode boxes of clearance garbage all the way into bankruptcy. Best Buy is using big-ticket goods at low prices. No garbage sold here. Televisions. Cheap, hi-definition, modern product sold at least as low as what you'd find online.

"They're telling the consumer 'Hey, if you're going for the best price don't go to Amazon (AMZN). Go to Best Buy. You can get something in a box and be out the door in 10 minutes.'" Again, they're matching something you get online (selection at a discount) and adding something you don't with immediacy.

3) Interactivity in more ways than one

Health and fitness electronics have quietly become all the rage. Jawbone Up and Fitbits are popping up on wrists all over the country. People are naturally combining motion with the sedentary lifestyle of going online. Best Buy is capitalizing on it.

Best Buy has interactive displays all over the place. Health and fitness meets shopping. Customers may be jumping around but they're actually standing in place. The interactivity "keeps you playing at these goods longer so a 19-year old associate comes in and tries to close you."

Shopping as a social experience with a real, living young person. What a good idea.

4) Excitement and selection

At the end of your journey, or the beginning if you happen to be in the 10% of customers who turn left when they enter a store, Best Buy has a carnival. "You'll see cotton candy makers. You'll see popcorn makers. These are impulse items that are so cool you can use them at a party. You didn't necessarily associate them with a Best Buy, but they're selling them and they're selling them in big lots."

Big ticket, goofy, high-priced products that take advantage of the impulses of customers who dare to venture outside the home and go shopping. You don't need a cotton candy maker. No one on earth needs a cotton candy maker in their house. But you'll buy it anyway because it fits in with you're new social self.

Best Buy isn't really doing anything particularly magical. It's science. They're creating a customer friendly environment and selling people stuff. It's an idea literally thousands of years old, kick-started into the new millennium. It's just merchandising with a modern twist. Best Buy has come back from the dead by executing retail basics in a modern age.

American shoppers will leave the house again. Retailers just have to give them something to do when they get to the store.

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