Free Home Visits Drives Growth At Best Buy
Despite a head on “discounting” assault by Amazon across several of their key categories US retailer Best Buy has been able to lift sales but margins have suffered in the battle.
The Company claims that a major contributor was their move to deliver free in-home consultations and connected services that resonated with consumers, some analysts are saying that this has contributed to the “margin” erosion.
Sales rose 4.3 per cent while revenues rose 2.9 per cent to $9.59bn.
US retailers have seen their top line boosted by improving wages, tax cut and a robust economy that has helped Americans loosen their purse strings, a direct result of President Donald Trump’s initiatives.
The results also come as Sears, a seller of appliances, has filed for bankruptcy.
“Similar to the first half of the year, our top-line performance was helped by a favourable environment and driven by how customers are responding to the unique and elevated experience we are building,” said chief executive Hubert Joly.
Best Buy has been among the retailers to have successfully weathered Amazon’s rise, despite the ecommerce giant’s moves to offer consultations on “smart home solutions”, services akin to those provided by Best Buy’s Geek Squad.
But last year the retailer stepped up its efforts in the connected smart home market, with its In-Home Advisor programme, that offers free consultations.
As part of a deepening push into this space Best Buy last month completed its $800m acquisition of GreatCall, a maker of care devices for seniors.
Gross margin slid 30 basis points to 24.4 per cent driven by higher supply chain costs, including investments and higher transportation costs that were partially offset by improved product margin rates.
Best Buy raised its full-year outlook, to reflect the strong third quarter, and now expected full-year comparable sales growth of between 4 to 5 per cent, up from its previous forecast for between 3.5 to 4.5 per cent.