Best Buy may be the most interesting multi-channel retailing story to watch headed into the holiday season. Best Buy is battling Amazon, Wal-Mart, Target and a bevy of others for tech sales and after a year of retooling may be ready for a turnaround.
The company on Thursday reported better than expected results with third-quarter earnings of 30 cents a share on revenue of $9.38 billion with same store sales up 3.2 percent in the US.
But the holiday season will tell the tale for Best Buy. Here's a look at what will determine whether Best Buy thrives or dives against Amazon.
- Ship from store fulfillment. This holiday season Best Buy will be shipping from 1,400 stores instead of 400 as it did last year. These ship-from-store efforts have cut inventory and boosted online sales. In the third quarter, Best Buy's online sales were up 22 percent.
- Digital marketing efforts. Best Buy said it is shifting marketing dollars away from TV and print to digital media and display campaigns. The company is also targeting its customers better via its database dubbed Athena.
- Personalization. Best Buy execs said that they are in the "early stages of being able to personalize marketing messages to individual customers," but seeing better click-through rates compared to mass marketing. "We are accelerating our targeted and personalized marketing programs."
- More analytics. The company said that it is investing in more analytics to track marketing and customer behavior. "We are applying more science behind our promotional and pricing strategies," said CEO Hubert Joly.
- Best Buy is moving into markets that are easier to defend. Appliances and home theater is being played up in store remodeling efforts because there's a higher barrier of entry for rivals.
- Mobile add-on services. Best Buy definitely landed an iPhone 6 pop with its third-quarter results, but is aiming to add loss and theft insurance to boost revenue. Installment billing is also helping the mobility category.
- Online improvements. Joly noted that customers are starting their shopping trips online and Best Buy's mobile and desktop sites have to be done well. The aim is to boost in store pickups from online shopping trips. From there, Best Buy may get an incremental sale. "The trip to the stores needs to be extraordinary from a customer experience standpoint," said Joly.