In its second-largest acquisition, Amazon buys the company for $970 million.
Comparable-store sales are flat, but that’s an improvement over recent quarters.
The 2012 holiday season was what one might call solid for BestBuy.com. Despite much buzz about the electronics and appliances retailer being vulnerable to web players such as Amazon.com that might offer lower prices, the retailer enjoyed a 10% year-over-year bump in domestic online sales for the nine weeks ending Jan. 5 to reach $1.1 billion.
Domestic comparable-store sales were flat at $12.8 billion. Comparable-store sales measure the sales performance for stores that have been open for at least one year.
Best Buy Co. Inc.’s online sales increase is slightly lower than what comScore Inc. reported for U.S. e-commerce sales as a whole over the holiday shopping season. The web measurement firm reported last week that online sales grew 13.7% to reach $42.3 billion during November and December. ComScore tracks the online behavior of 1 million U.S. consumers for its web sales estimates.
Best Buy, No. 11 in the Internet Retailer Top 500 Guide, was one of the top three most-visited web sites on Thanksgiving and Black Friday, the day after the holiday, according to comScore. On the Monday after Thanksgiving, also known as Cyber Monday, BestBuy.com ranked third in traffic with 9.3 million visits, according to Experian, which tracks the web traffic of 500 large U.S. Internet retailers.
CEO Hubert Joly says domestic comparable-store sales, while flat year over year, improved when compared to previous quarters. Domestic comparable-store sales fell 4.0% year over year for the third quarter, 1.6% for the second quarter and 3.7% for the first quarter. Web sales for Q3 grew 10% to $431 million, Best Buy said in its third quarter financial report, marking the first time Best Buy broke out web sales.
Joly attributes the stronger comparable-store sales performance in part to its turnaround strategy launched in November, dubbed Renew Blue. That plan includes changing up store layouts to entice customers to buy rather than browse. In one store in Richfield, MN, Best Buy widened the aisles, reduced the height of fixtures and built a centralized station to promote the latest products. For August and September, sales increased 10% in that store compared with the same period in 2011 and the customer satisfaction score increased from 83 to 88, said Stephen Gillett, who was president of Best Buy digital and global marketing and strategy business services at the time, in November. Gillett was never to fully execute his vision, as he left Best Buy in December, after only nine months, to become chief operating officer at Symantec.
The plan also focuses on e-commerce and, in particular, increasing conversion rates. Best Buy says its conversion rate, coming in at 1.3% in November, is hurt by the 9% of shoppers who say they didn’t make a BestBuy.com purchase but wanted to, the retailer said that month. Their reasons were often that the price was too high or that the item was out of stock, Best Buy says.
"One of the first priorities of our Renew Blue strategy is to stabilize and then begin improving our comparable-store sales,” Joly says. “During the most important period in the retail calendar – the holiday sales season–we were able to improve our domestic comparable-store sales trends compared to the performance of the last several quarters and continue our strong traffic growth in our online business. Our holiday selling strategy, backed by a compelling assortment, increased employee training and price match policy, allowed us to deliver these results.”