Best Buy CEO Opens Up About Where Harvey Norman + JB Hi Fi Are Going + The Collapse Of PC Sales
Talking to Walt Mossberg the former Wall Street Journal Tech Editor who is now running the web site RE Code Best Buy CEO Hubert Joly said that the PC market is on the way back due in part to Microsoft stopping support for Windows XP however he did say that tablet sales had “crashed”.
Juley talked about “show-rooming” in which consumers try out products in a store but then buy online from e-tailers like Amazon.
To fight this Best Buy has expanded its price matching to include online sellers.
Like JB Hi Fi Best Buy has revamped their website in the hope that it will become a bigger shopping destination for people who start, or even complete, purchases online.
Sinking sales of Windows PCs, once a reliable Best Buy mainstay, which had their worst sales year ever in 2013, and, lately, a dive in the sales of tablets is affecting the retailers business. In Australia mass retailers such as JB Hi Fi, Harvey Norman and Officeworks are currently revamping their PC business to mirror the Best Buy model.
Hubert Joly said “We’ve actually had a revival of the PC business at Best Buy, part of it was that Microsoft stopped supporting the old version. Tablets boomed and are now are crashing, the volume has really gone down in the last several months. But I think the laptop has something of a revival coming because it’s becoming more versatile. So, with the two-in-ones, you have the opportunity to have both a tablet and laptop, and that’s appealing to students in particular. So you have an evolution. The boundaries are not as well defined as they used to be” he said.
He added “If you take the [Microsoft] Surface, is it a tablet or a laptop? I think it’s both. So I don’t think the laptop has said its last word.
When asked about Apple sales he said “If the Mac continues to do interesting things and converge across the entire Apple ecosystem that could be very positive. And, you know, the Mac sales have actually done quite well. Part of the problem is that, for the Windows market, the deflation has been enormous. You now find laptops at $300 that used to cost $1,000. So, if there’s more innovation at the high end of Windows, then you could have a revival”
On the question of why tablet sales have “crashed” and whether tablets will disappear he said “Crashed” is a strong word. Tablets have been an unbelievable phenomenon. I don’t think there’s a category that ever took off so quickly and so big in the history of tech. The issue has then been that, once you have a tablet of a certain generation, it’s not clear that you have to move on to the next generation”
“As a consumer. I think replacement is the issue. The penetration has gone so fast that it’s reaching an amazing degree and therefore it becomes more of a replacement market, and the level of innovation in the past year has not been as great as it had been in the previous two years. So, there again, the jury’s out in terms of what’s going to happen, because it’s going to depend on what innovation comes to market. But you need a reason to replace”.
Mossberg asked Joly “When I walk into a Best Buy I now see, right from the front door, a giant Apple logo. I see a giant Samsung logo. I see a giant Microsoft Windows logo. And those are stores within a store. So it leads me to wonder: Have you simply rented out your stores?”
Joly said “No, this is not rented. What we’ve done is, we’ve made Best Buy the place where customers can discover, understand, these different ecosystems. There’s these giant ecosystems: The Apple world, the Android/Samsung world, the Windows world. And so, for the customers, it’s a very unique opportunity to see it in one place, and in the space of half an hour, to be able to talk to our various specialists, and touch, feel, experience these products.
But it’s our store. It’s staffed by Best Buy staff”.
Why would people not just use your store as a showroom and then buy the products on Amazon?
Two simple reasons. One is our prices are competitive, and we match others’ prices. So, once you are in the store, you have no reason to leave.
He said that according to Google, when people buy something above $100, the shopping journey starts online.
“So it’s really the “Web-rooming” phenomenon much more than the “show-rooming” phenomenon. Because we’re making our site a destination for customers who want to do research. So you’re just as happy if I never go into your store but I buy from your website”.
“We love to serve you the way you’d like to be served” Joly concluded.
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