FARMINGTON — How are they still around?
While the world has witnessed the steady decline and demise of big-box electronics stores since their heyday in the '80s and '90s, Best Buy has continued to navigate a successful path forward in the face of aggressive competition from online retailers.
And now the 52-year-old Minneapolis-based business is doing something else entirely unexpected — opening a brand-new store in Farmington.
It will be the first new U.S. outlet for the company in seven years and is, perhaps, the physical manifestation of a winning business approach that Charles Darwin would have appreciated — adapt or die.
Bret Nelson is the general manager of the new store in Farmington's Station Park and a 12-year veteran of the company. He believes Best Buy has distinguished itself from online competitors through providing both pricing value and something that the digital ether can't offer shoppers — an in-person experience with expert help.
"I think our key is the training we put into associates," Nelson said. "The company has spent a lot of money on training our staff and making sure they have the product knowledge to demonstrate and show what’s possible."
Best Buy has also adopted programs to extend in-person customer service beyond the walls of their expansive retail outlets. The company purchased Geek Squad, a roving tech support startup, back in the early 2000s and more recently expanded in-home services with a subscription-based Total Tech Support service. The company also offers free visits and consultations from a team of its In-Home Advisor program that can provide insight and direction on customers' technology and appliance needs.
University of Utah professors Arul and Himanshu Mishra teach marketing at the David Eccles School of Business, and both specialize in consumer behavior. In an email interview with the Deseret News, the Mishras wrote that in-person assistance, particularly with purchasing high-tech products, can be a powerful differentiator for buying decisions.
"Tech products are constantly changing and it is difficult for customers to keep track of the constant updated models," the Mishras said. "The added features are also abundant and it is difficult to convey all possible information online. Having a person explain to them the benefits from features is preferred rather than gleaning that information from other customer reviews."
The Mishras also noted that consumers are typically "cognitive misers" who want to make a decision quickly and efficiently and "prefer to talk to another individual and make a decision rather than go through a lot of online information."
While personal service matters, and can help sway a purchase decision, pricing still figures largely in the minds of consumers, particularly for big-ticket items. Earlier this decade, Best Buy was losing money at an alarming rate and getting beaten on price points across the board by a rising online nemesis, Amazon.com. Shortly after he was hired in 2012, CEO Hubert Joly instituted a price-matching program that promised customers Best Buy would match any price offered by the online retail giant.
That program continues and, according to details on Best Buy's website, the price-matching promise extends to any retailer within a 25-mile radius of a Best Buy store as well as a handful of other online outlets.
Joly's focus on human interaction and price points is proving to be a winning formula for Best Buy. While the company's stock dropped to about $11 a share shortly after he took over, the value has been on a steady upward trajectory since, and on Thursday it was trading at $72.65 a share at the end of regular trading.
A recent Bloomberg report noted the company consistently outperforms analysts' earnings estimates when compared to other brick-and-mortar operations like Home Depot, Costco and Walmart, as well as those of its digital adversary, Amazon.
While Amazon competes directly with Best Buy across numerous product lines, the company did something else that may seem counterintuitive — it struck a deal with the online retailer to feature a selection of its products at mini-stores located inside Best Buy locations. Google, Microsoft and Sony also have similar in-store deals with Best Buy.
Wedbush Securities Inc. analyst Michael Pachter told Bloomberg the partnerships have been a "phenomenal success" that have helped Best Buy bolster its bottom line.
"Best Buy is like an arms dealer,” Pachter said. “They’re indifferent to what brand you buy as long as you buy it from them.”
The recent bankruptcy declaration by the 125-year-old U.S. retail icon Sears will also, according to industry watchers, bode well for Best Buy. A CNBC report earlier this week noted that 85 percent of Sears stores are within 5 miles of a Best Buy store and that the Sears' filing is "a major positive for Best Buy."
Best Buy is currently operating over 1,000 stores and employs some 125,000.
Nelson said he believes the new Best Buy location in Farmington will also contribute to the company's continued arc of success by providing its in-person customer service and competitive pricing in a location that was previously underserved.4 comments on this story
"People in this area who wanted to shop at Best Buy have had to travel over 15 miles north or south to get to the nearest store," Nelson said. "We're very excited to be a part of this community."
Nelson said the new store is staffed with about 90 employees and is in the process for hiring additional help ahead of the holiday shopping season. Those interested in employment opportunities at Best Buy can find details at bestbuy-jobs.com.
A Best Buy spokesman said, with the addition of the Farmington outlet, Best Buy has almost 1,000 Utah employees working at nine stores.
Correction: A previous version incorrectly stated the age of Best Buy. The chain is 52 years old, not 35.