Best Buy Rebranding Reverses Historic Course

Old Best Buy logoBest Buy has launched a corporate rebranding that is both sweeping in style and represents a shocking reversal of course, undoing much of its original mission that was created when founder Dick Schulze, President Brad Anderson and crew launched an entirely new store concept known as “Concept II.” Concept II was a reinvention of their formerly more traditional superstore design to a new warehouse style discount store designed to deliver the “Best Buy” on all things tech. This new branding change is to such a significant degree that even Advertising Age Magazine (AdAge) devoted significant space to an analysis of it.

See more on this surprising reversal of the genesis of Best Buy’s founding concept…



Best Buy, for many decades has been using a large yellow graphic representing a price tag with bold black letters decrying “Best Buy.” It was designed specifically for the purpose of suggesting that this store offers very low pricing on technology – the best buy in tech. And although their branding concept to support that image has changed over the years, essentially, the company was all about the most tech at the best price.

About a year ago, according to a report by AdAge, the company began working on a new brand concept. Most likely this was due to the fact that the company continued to get a lot of competition from the 800-pound gorilla of retailing – Amazon.com. Best Buy’s original concept of being the place to get the best buy on technology was being usurped daily by Amazon.com, which was usually offering a better buy than Best Buy.

It’s No Longer All About Price

So Best Buy’s new logo demoted the price tag to a small graphic that is positioned next to and at the bottom of the bold Best Buy name. This is a not too subtle suggestion that they are no longer JUST about pricing. This alone would be a huge change…but there’s more.

Best Buy's new logoTo promote this new Best Buy, the company is turning to what it believes may be its secret weapon to defeat Amazon.com – its blue shirts. Yes, now employees are front and center in their advertisements, suggesting that you now shop at Best Buy because these young and attractive employees in blue shirts…an army of them…are there to provide personalized service.

Ouch! Amazon.com can’t do that!

Executing a Complete 180°

The company has overhauled their logo…their website…their advertising…and their thinking about how to position themselves against the competition. New television ads will begin running later this week. It’s an all new Best Buy.

But it’s a Best Buy that has done a complete 180° turn from the branding concept that got them here. Who am I to say that? I’m an expert on Best Buy…or at least on the old Best Buy.

FULL DISCLOSURE: I consider myself a bit of an expert on Best Buy’s original Concept II warehouse stores, as the launch of this concept back in the early 1990s put the company I represented (Onkyo USA) on a collision course with Best Buy – one of our top dealers at the time. In order to help put their new branding change in context, let me first take you back to the early 1990s.

Going Way Back to the 1990s to Meet Concept II



At that time, the Best Buy store layout consisted of a fairly traditional superstore design, not unlike one of their major competitors at the time, Circuit City. Throughout the 1980s, the Best Buy team began experimenting with different store concepts and designs. While this tended to give them a fragmented presence, as each store looked different from the others, the company was seeking a design for the future.

What the team ultimately settled on was something they called Concept II. This Concept II format was unlike any they had tried before. First, they adopted a warehouse affect, much like a Price Club or Sam’s Club. The design was large, well lit, had plenty of signage and rack shelving that was designed to be self-serve to the consumer – even offering grocery store-style shopping carts included.

Anyone Seeking the Best Buy in Tech Would Have to Go to Best Buy

The goal was to reduce operating overhead, lowering their costs so much that the company could sell technology products for much less money. Their goal was to have a lower operating cost than any other competitor so that nobody could legitimately beat their prices. If consumers were looking for the best buy in technology, they would HAVE to go to Best Buy to get it.

The two greatest cost factors for large discount technology retailers in those days were advertising and personnel. So this became the initial goal of the company – drop these costs to an absolute minimum. So Best Buy adopted an “Every Day Low Price” concept to break the cycle of having to print weekly circulars that were costly to create, print, and distribute. And they then dropped their floor pricing to below market levels so shoppers could instantly see – and buy – technology at the cheapest price…rather than wait for a flyer to show that week’s specials.

Photo of freestanding Best Buy store location

An older freestanding Best Buy location

This Decision Put Best Buy and Onkyo on a Collision Course

But the decision that put Best Buy on a collision course with Onkyo, was their decision to eliminate the salesperson’s position. Previously, lost most component hi-fi retailers in the day, Best Buy compensated their sales staff with commissions on the items they sold. In Concept II, there was no need for a salesperson…customers would push their shopping carts around and pick the box for the item them desired off the warehouse rack and put it into their cart on their own.

For Onkyo, this was an instant and obvious problem. Onkyo products were better built and had unique technologies and features…and consequently cost more as a result. For their components to sell well, Onkyo believed they needed a knowledgable, motivated, and capable retail salesperson who could show, explain, and demonstrate the Onkyo advantages. To Onkyo, the model that had been proven to work, was one that included a well-trained, commissioned salesperson who, because of the way they were paid, would be willing to invest the added time necessary to show and sell a step-up product like Onkyo in order to secure the sale.

Best Buy Had Skeletal Staff, No Commissions, and No Salespeople



But Best Buy eliminated the salesperson, employing only skeletal staffing of shelf restockers. Consumers who needed assistance to understand the relative merits of multiple models were directed to a computer where they could research such matters for themselves.

Those of you who have been in this industry that long, may recall that the issues between Onkyo and Best Buy ultimately boiled over, resulting in a major lawsuit that after a few years of back and forth battling, was settled by the parties.

Actually, the Best Buy Model has Been Evolving for Years

In truth, Best Buy’s strategy has been evolving for years. Perhaps the best example of that was their decision to acquire the Geek Squad in order to be able to offer customers repair and installation services.

Best Buy store and Geek Squad truck

Geek squad truck and car outside a Best Buy location. Note that the entrance at the lower right hand side of the photo is the entrance for those picking up “Web Orders”

But clearly, Best Buy’s new branding initiative seeks a new path, where their staff becomes not just a feature, but rather a central source of competitive advantage over the more impersonal online sales outlets like Amazon.com.

“It’s really about building more aggressively toward serving customers and helping change lives with technology,” says Whit Alexander, Best Buy’s new chief marketing officer told AdAge. “We needed a way to tell the story a little differently through how we interact with customers.”

Blue Shirts to Customers: ‘Let’s Talk About What’s Possible’

Best Buy’s new concept – not in stores but in brand – is embodied in a “rallying cry,” according to Alexander, of “Let’s talk about what’s possible.” A concept that AdAge says “positions Best Buy as an inspiring friend that can help consumers achieve their goals.”

Concept II sought to ELIMINATE employees. Now, Best Buy seeks to EMPHASIZE employees.

To me, that sounds like a value-added concept!

See the new logo and website for Best Buy at: www.bestbuy.com.


About Ted

A sales and marketing specialist - primarily in the technology industry - I've experienced a sort of "circle of life" in business. I've been a mass merchant retailer, a specialty retailer, a specialty manufacturer, a large volume manufacturer, a distributor, and even represented sales representatives. Now the owner of a marketing company that works with a variety of businesses on improving their strategic marketing and business development - I analyze issues from all angles to develop holistic solutions.

Comments

Best Buy Rebranding Reverses Historic Course — 10 Comments

  1. Your points are well made as usual Ted. Ironic to some extent isn’t it? Best Buy has gone full circle from that Concept store where it decided no help at all was needed to certainly the largest “full” service retailer of CE goods. While some may question the level or quality, they are far above Walmart, Target or Amazon on that ground. Yes, we know many smaller or regional retailers who can outmatch them on knowledge and service, but we are also happy to have them as partner. Their Magnolia effort allows high quality product sales from some 300 outlets, and where would we be without them? Love them or not, for most Americans they remain one of the best choices to review a wide range of product. As well, they are generally self aware, and will partner with others when needed, such as complex installation, etc. Drawing a line between convenience and content without help from a human is a big differentiation and their more recent performance gives real hope to other retailers in CE or otherwise that consumers still need a hand and appreciate the experience.

    • Yes, incredibly ironic. And at some level I welcome it…the more value add dealers we have perhaps we can put an end to this “race to the bottom” pricing scheme that is so destructive to our industry.

      Hopefully, this program by Best Buy is real…and not some PR ploy. Time will tell.

      Thanks, as always, for your thoughts Robert!

      Ted

  2. Yes, but the big question is — How will Best Buy make sure their employees are trained and educated to be able to answer the consumer’s questions????

    • Petro,

      That is indeed the question. I am sincerely hoping that this is a real strategic effort on Best Buy’s part and these types of questions have been anticipated. But it could be nothing more than a simple PR ploy. Let’s see what happens…

      In general, I support anyone seeking to add value to technology…rather than devalue it to get ever decreasing price points to undercut competitors and run the industry down the drain.

      THANKS for commenting!

      Ted

  3. Oozing with irony… as usual Ted, your points, as well as and your personal historical fact-checking layered on, make for some of the very best reading in our space.

    I commend Best Buy for continuing to be very smart about how they have gone about just about everything they’ve done over the last five years. And I commend them for this repositioning/rebranding effort. I’m not sure there will really be a marked improvement in the overall quality of the consultative sales process they currently have. However, when dealing with the likes of amazon/Wal-mart, the bar is so low that the blueshirts, somehow, emerge as the cream of the crop and can indeed be a competitive advantage.

    In the same period you described (the late 90’s), I was at Tweeter when we issued our IPO. Among the many issues our CEO now had to now juggle was decreasing SGA while increasing both top-line and bottom line numbers. I remember one time when he asked our VP of Training to figure out how to cut a week off from basic training, he replied with “funny, I was just coming see you about ADDING a week to basic training”. At the time, “basic” training was a six-week initiation into the company and, essentially, a deep dive into the history of hifi. For six weeks salespeople drew a paycheck without being on our commissioned floors. This was a seriously expensive proposition when we were privately held, but once we went public, this was a beacon.

    You could argue that today’s plethora of goods and the rapid pace of change would require considerably more training time than the six weeks of paid training we provided then – in order to turn out a reasonably good rookie. I doubt very much that BBY has any appetite for that level of commitment. However, every circus usually has one small person that stands head and shoulders above the rest. And this case, Best Buy’s blueshirts are indeed that. They have once again made the right move by repositioning this unique selling proposition and while these (usually) young people may not meet the standards you and I once knew, they are indeed the tallest of the short people in today’s circus.

    • Hi Bernie,

      A little sad that the gauge has been set so low, but like you I like the idea of BBY adding value!

      Thanks for commenting!

      Ted

    • I miss tweeter and I always wondered just how they managed to run their business so stupidly. They opened one in Gurnee, IL in the BB parking lot. It lasted about a year. I got a Velodyne DD18 at the going out of business sale for an obscene price. It’s still going strong 10 or 12 years later. Had they done any market research they’d have known that wasn’t a great place for higher end stuff. A little while later the one in Schaumburg closed and I got a great deal on a cd player that just croaked in the last year. It’s hard to find stores that are practically giving stuff away anymore.

      I had read around the time they went out of business that the ones that were making money were those that had the rooms set up more like living rooms rather than typical showrooms. I don’t know if it’s true but it seems like a good way to sell. Too much of the time there’s way too much selection between negligibly different products. I’d rather have them do more of the weeding out for me and have a limited number of really good choices and someone who can explain the differences.

  4. They don’t really have any competition other than the web and since they won’t be able to beat the internet on price they’re stuck trying to add value through service. I personally prefer to talk to a knowledgeable person and I’m willing to spend a bit more for it. It just has to be reasonably close to the cheap web price. If it’s 15 or 20% more I’ll probably be willing to pay it in most cases.

    I recently was in the market for a preamp and I did my usual research on audio shops and I got the impression that there are as many or more of them out there now than 10 years ago. You always hear about how the audio market is declining but I don’t think that’s true any more. There must still be a decent number of people who will pay for quality and service. I don’t know how well that translates to consumer electronics in general but I’d consider this BB move a sign that I’m not alone in thinking the market is a bit underserved right now.

    • Hi Joe,

      I agree…I believe many if not most are willing to pay for fast, knowledgeable, courteous service if the price delta is not too great.

      I welcome Best Buy’s change to more of a value-add format…as long as this is a real initiative and not just an advertising gimmick.

      Thanks for commenting!

      Ted

  5. They added Magnolia to many of their Illinois stores a number of years ago and that might have been one of their first steps into a value-add position. Being an veteran of the specialty AV industry I always snoop around Magnolia and I must say their salespeople have become more knowledgeable by leaps and bounds over the last few years. I even bought an LG OLED and Oppo UHD player there earlier this year. Initially, I was just intending to look there and buy elsewhere but the salesman knew his stuff and spent time with me so he earned the sale.

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