Recently, news of two additional big announcements popped this past month that show just how big of a graduate level omnichannel game Best Buy is playing. First, Best Buy announced that it will significantly reduce selling space to convert four Best Buy test stores into fulfillment hubs. Second, word also came within the very same week that Best Buy has embarked upon an interesting new program with Shipt.
According to Chain Store Age , Best Buy, back in September, began piloting a program called, Shipt Driven, a concept whereby Best Buy uses Shipt drivers only for pickup and delivery and not for in-store picking. Taken together, these two concepts — stores as mini-fulfillment hubs and white label last-mile delivery — are genius because they take advantage of heretofore untapped economies of scale.
The idea behind micro-fulfillment is simple. Stores are also closer to consumers from a last-mile delivery perspective. Together they lay the foundation for something never seen before: a modernized omnichannel store operating system, one where the store is an optimized node within the supply chain but also a foundation for a new way to shop. The only long-term differentiators of a physical and digital experience are the confidence one gets from the helpful human-to-human interactions inside of a store or the social experience of shopping itself.
The beauty of what Best Buy is doing with its recent experiments is that they are one part supply chain optimization but also one part new retail experience design. The more sales go online, the less space retailers need on their floors for shelf stock.
Similarly, the more fluid digital processes become, both for customers and for employees, the less stores are needed as a place for said stock because customers and employees can simply decide how they want products to be fulfilled with the quick press of a button. All of which means that Best Buy could be on the verge of reimaging something old and making it new again — i. Only this time the model is modernized by technology. Yet when faced with declining sales and overall economic weakness in the years following the Great Recession of —, Best Buy and other chains buckled under the pressure and lost sight of what they could do that pointing and clicking could not.
As the recently opened American Dream mall in New Jersey provisionally shows, more people are hungry for experiences wrapped up in their shopping and will choose to shop at a physical store if they can have an experience that goes with it. The most extreme example is Changi Airport in Singapore, which has become a retail mecca and fantastical set of enclosed adventures, with waterfalls and trails, attracting not just transit passengers but tourists visiting the airport itself.
If an airport can become a retail destination, anything can. But the idea that with a physical place should come human service can have wider application. Best Buy located the customer pain point, which for consumer tech is getting devices to sync and integrate and talk with one another without hours spent dealing with customer service.
Yes, you can buy everything and anything sold at Best Buy elsewhere, often for the same or lower price. But the mix of selection you can play with and people who can help you is an analog reality without a digital incarnation. The company is laying off thousands of employees and reskilling others for digital roles.
It is testing new stores with a smaller sales floor and more space for fulfilling online orders. And it is considering shrinking the footprint of its nearly 1, stores across the country. Online sales in the U. Barry said she expects a larger percentage of Best Buy's overall sales will take place on its website and app rather than in its stores. Even with this rapid growth, Barry said, the company's brick-and-mortar footprint will still play a key role.
Stores will have products on display and staff to help customers, but they will also increasingly serve as warehouses where employees pick and pack e-commerce orders and convenient spots where shoppers can quickly retrieve an online purchase in the parking lot. Barry said the company will sign shorter lease agreements for its stores going forward and have a higher bar when they come up for renewal.
She said about leases are coming up for renewal in the next three years. Best Buy has closed about 20 large-format stores in each of the past two years — and Barry said she anticipates it will close a larger number of stores this year. The consumer electronics retailer, historically known for its vast sales floor and eye-catching displays of gadgets, has a new look at some stores near its Minneapolis headquarters.
It remodeled the stores in November as part of a pilot. This is something other retailers such as Target are doing to help make online orders more profitable. At some Best Buy stores, it cut its shoppable square footage nearly in half — to 15, from an average of 27, square feet, Barry said.
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