Best Buy Co., Inc: Sustainable Customer Centricity Model Essay

high hat vitiate is the largest national electronics chain and the only one that remains since the closing of Circuit City in 2009 and Comp USA before that. Founded in St Paul, Minnesota in 1966 as the Sound of Music Store, it was rebranded as dress hat grease ones palms in 1983 with a single flagship introduce in Burnsville, Minnesota. By 1993, beaver vitiate had bring about the unite States second-largest consumer electronics retailer, breaking into Fortune magazines annual ranking of flower 500 companies dickens years later at number 373. A partnership with Microsoft in 1999 second to boost the beau mondes profile and lead to the opening of its first retail submit in Shanghai which was followed by stores in Canada, Mexico, Turkey, and nine European countries (Lowe, 2008 May 8). crush veritablely operates 1,105 big box stores in the United States. In addition to personal computers, computer equipment, and consumer video and audio products, Best sully outlets, which are on average 44,000 square feet in size, too offer large and small appliances, and entertainment software that includes videodisks, compact discs, video games, and computer software (Funding Universe, n.d.). Best Buys subsidiaries include bit Squad, Magnolia sound Video, Pacific Sales, and in Canada, it operates under both the Best Buy and Future Shop labels.Best Buy differentiates itself from its closest competitors, Walmart and Amazon.com, by not boil downing on low cost products but by sack from an aggressive commission-based system of service to highly trained gross sales agreements associates and service solutions. Having a well-trained staff who crapper educate the nodes regarding product features, allows the guest to make informed buying decisions on big-ticket items. In addition, with Geek Squad capabilities available in-store, Best Buy is able to provide institution services, product repair and on-going financial support for these or other items the custome r purchases (Hill & Jones, 2013, pC22). This end-to-end solution is one aspect that separates Best Buy from its competitors.This is in addition one of the many strengths Best Buy currently possess. Best Buys customer centricity approach is key in its survival and is something often missing from their competitors. Best Buy takes the time to go through who its customer is and what they need. They then took this information and started selling solutions instead of just products.Best buy also changed the layout of the store based on customer feedback. This included bundling together related products, offering installation help for all electronics, and improving store productivity by adding more technology experts to the sales floor and deploying see screen monitors with product information. Future plans also include a 10% reduction in US square footage over the next 3 to 5 years. A reduced floor plan pass on not only be more cost efficient but will provide an boilers suit easier sh opping experience for the customer (Briggs, 2011 April 14). Customer centricity is necessary in todays competitive mart and it is a concept Best Buy continues to excel at.One of Best Buys weaknesses includes the stock of net income and operating margins. Although this could be a function of summationd costs, it is more the likes ofly due to set pressure (Hill & Jones, 2013, pC20). The economic filiation and consumer pressure has forced the prices of consumer electronic products to be lowered. This decrease in prices has caused the even out in margins which negatively affect net income and operating margins. Another area of concern is the increase in accounts receivable and list. Best Buy had a 1% increase in inventory from 2008 to 2009 and a 12.5% increase in revenue accompanied by a 240% increase in accounts receivable (Hill & Jones, 2013, pC20). This creates a potentiality risk for losses due to bad debts. Best Buy is weak in their ability to quick adjust inventory level t o the demand, in order to reduce costs related to inventory. Best Buy did not recognize the economic downturn and was not successful in adjusting their inventory levels (Sienna College, 2009 April 17). This is an area for amelioration for Best Buy as the economic downturn has created an oversupp duplicityd market.Best Buys best opportunities lie in their series of acquisitions into their Best Buy family. Best has gained valuable experience in the process of combine new companies and service providers with their keen ability to know where to expand and is a key component in their ability to differentiate their confederacy from others in the marketplace (Hill & Jones, 2013, pC23).Best Buy also has room for opportunities as they film expanded upon their spheric presence. This global presence exceeded expectation late in 2009 with a 15% uptick in international sales. European stores experienced a 4% gain in same store sales, while Best Buys China store sales jumped 34% (Lindner, 2 010 March 25). This global presence also opens up opportunities to trace global technology rationalises first hand and opens the door to fresh developing markets. It also provides a wide range of places to test and introduce new products and analyze customer ineluctably.Best Buy faces many threats beginning with the economic decline. Todays customer has less disposable income and Best Buy sells luxury goods and not necessity items. The future of the economy including consumer confidence, unemployment, tax rates, fuel costs, and the accessibility of consumer credit are all factors that could affect consumer spending and Best Buys earnings.Another concern for Best Buy is increased competition particularly from online competitors like Amazon.com. Amazon has an advantage over Best Buy because they are able to maintain a lower cost structure compared to a brick and mortar store like Best Buy and put forward push those savings through to their product pricing and selection. With an i ncreasing trend in the consumer electronics industry to shop online, Amazon.com is positioned perfectly to maintain salubrious market growth and potentially err some market share away from Best Buy (Hill & Jones, 2013, pC22). Best Buy will lay down to continue to differentiate themselves from their internet competitors with their unmatched customer centered model of business.Based on the findings of the debone analysis, Best Buy should continue to develop and implement their customer centricity model. This customer based model creates reveal customer satisfaction, promotes growth, and creates a unique experience. On the other side, Best Buy needs to address their decline in net operating income. This means cashing in on opportunities such as expanding their global presence which has had much success in generating profits. Best Buy should also be conscientious of their inventory levels in comparison to revenue increase. They need to adjust for the economic downturn while continu ing to offer a good mix of products accompanied with superior service.Best Buy needs to stay on top of technology trends in order to keep up with online sales threats from Amazon.com and others. Best Buys focus should be on the continual improving of the in-store shopping experience that currently differentiates them from competitors like Amazon. This means added customer service, technology experts, and services that take the customer from the initial purchase all the way through installation and use.Best Buys corporate level strategy revolves around their customer centricity model and is the center field of their company mission and goals. To implement this strategy and achieve a competitive advantage, Best Buy maintains a wide variety of products to meet customer needs but also goes beyond the initial sale into service offerings. Best Buy has used their customer centricity model, which is built around a significant database of customer information, to construct a diversified por tfolio of product offerings (Hill & Jones, 2013, pC22).This vital database allows Best Buy to structure customer needs to the locations they are requested, which in turn helps keep costs lower by shipping the correct inventory to the correct locations. This is important because it helps to offset the extra costs required to provide high-level training to sales associates and service headmasters. This structuring of inventory is a large part of their business-level strategy and is advantageous for Best Buy because apiece market contains the products most desired and avoids items not sought after by customers.Best Buys customer based structure is only as strong as their greatest service professional and staff member. Best Buy recognizes this and invests a lot into their employees. Best Buy has a reputation for retaining their genius and is widely recognized for superior service. Highly trained sales professionals, like the members found at Best Buy stores, have become a unique reso urce in the consumer electronics industry, where technology is changing at an unprecedented rate, and this is a significant source of competitive advantage for Best Buy (Hill & Jones, 2013, pC23).Currently, Best Buy has recently gone through an organizational change due to the departure of CEO Brian Dunn, U.S. retail oral sex Mike Vitelli, and chief administrative officer Tim Sheehan. New CEO, Hubert Joly, is in the process of outlining new strategies that will prove operations and financial performance. He has stated that he will continue to build on their strong customer service model and their multi-channel shopping experience (Best Buy News Release, 2012 November 13). While this falls in stride with Best Buys previous strategy, Joly has also stated that Best Buy has been loosen up in capturing their fair share of the online channel. This leads me to my first recommendation, having a larger e-commerce presence.While Best Buy cant duplicate their high-level customer service exp erience found in-store they can expand on sales by offering a broad range of products online. From here, customers can be invited to visit stores in person for services that may aide in the set-up and installation of products purchased online. I also recommend that Best Buy address their issues with outstanding debt by temporarily halting expansion and focus on their current strengths. While acquisitions have been very profitable for Best Buy, they may want to slow down temporarily as the economy starts to recover and consumer spending slowly begins to increase.While Best Buy has faced a lot of hardship in recent years, they also have made smart strategic decisions that have kept them pliable. Best Buys new leadership has a lot to work with and should also introduce fresh organizational change that will help propel Best Buy into profitable territory.ReferencesBest Buy News Release. (2012, November 13). Best buy holds analyst and investor day to provide assessment of the company and to outline priorities to reinvigorate performance and rejuvenate its business. Retrieved from http//pr.bby.com/phoenix.zhtml?c=244152&p=irol-newsArticle&ID=1758160&high