Best Buy Co., Inc.

:
Customer Centricity
GRO UP 5:

GAUTAM JAIN
JAIRAJ T
MUKESH PATEL
REETI PRIYANI
RISHI SINGH

Situation Analysis
American multinational consumer electronicscorporation; headquartered in
Minnesota
Founded by Richard M. Schulzeand Gary Smoliak in 1966
Global Consumer Electronics retailer; presence in US, Puerto Rico, Mexico,
Canada, and China
After 8 years of double digit revenue growth, Best Buy missed its 3 rd quarter
earnings per share in 2005.
Roll out of 144 new centricity stores, departure from earlier format of selling in
2005
Customer Centricity-Targeted Value propositions to different customer segments

Situation Analysis
Before 2005:
Best Buys rapid expansion enabled by Standard Operating Platform
Aimed to ensure uniformity of services across the network
2005:
CEO Brad Anderson introduced Customer Centricity to compete with mass
merchandisers and to cater to the changing consumers
Research revealed that customers left dissatisfied, broad focus did not meet
individual needs
One style fits all approach no longer valid, called for shift in focus from
product centricity to customer centricity

Problem Statement
Questions to address:

Alternatives
Continue to convert all stores to customer centricity
Gradually revert back to the model before conversion
Continue with the previous model in short term and slow down the pace of
conversion

Alternative 1
Continue to convert all stores according to the concept of Customer
Centricity
Pros:
Better and potential long lasting relationship with customers; building of
brand loyalty
Better location-specific services of the stores; empowered sales associates
Better focus on the 20% of total customers that were most profitable
Cons:
High training and staff expenses; Renovation and Infrastructure costs
Expenses increased to 21.7% in 3rd quarter of 2005 from 19.5% in previous
year
Internal conflict among segment leaders and merchants

Alternative 2
Gradually revert back to the previous model
Pros:
Expenses are reduced. Increased share-holder satisfaction

Cons:
Lack of differentiation with competitors. No customer loyalty.

Implementation
Communicate internally and externally about customer focused operation
model
Slow down pace of store conversions