Best Buy stopped fighting Amazon on price and charged the brands rent.
Best Buy couldn't win a price war with Amazon, so it sold its floor: 1,400 Samsung and 600 Windows stores-within-a-store by fiscal 2014. Revenue recovered toward $42.4 billion.
Transcript
Best Buy's stock had sunk below $15, and Amazon was the rival. What would you have done?
Option one: fight on price. Option two: treat the stores as the only national showroom for electronics, and charge the brands rent. Best Buy could not win a price war with a company that ran on thinner margins by design. So, under Joly's plan, Renew Blue, it stopped fighting one.
By fiscal 2014, Best Buy had opened 1,400 Samsung and 600 Windows stores-within-a-store.
Best Buy's revenue troughed near $39.8 billion in fiscal 2013 and recovered toward $42.4 billion in fiscal 2014. Domestic online sales rose 20%. Cost cuts beat a $725 million target, reaching $765 million in one fiscal year.
When a rival wins on structure, matching it on its own terms is rarely a plan. Ask what you have that it does not. For Best Buy, it was floor space. The record shows the plan held. It cannot show that a price war would have failed for sure.
The records behind this video
Every figure in the video comes from this Decision Record, each with its sources.
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