Best Buy built a retail empire selling TVs and laptops. But to keep growing and fend off rivals like Amazon and Walmart, the company needs new ways to attract customers.
Best Buy (BBY) outlined plans Thursday to expand its footprint into health, fitness, personal electric transportation, outdoor products and other potentially big ticket areas outside of its core consumer electronics business.
It’s adding merchandise to stores in dedicated sections, such as Hydrow and NordicTrack home gym equipment, Super 73 and Segway e-bikes and scooters and Weber outdoor grills.
Best Buy is betting that it can smoothly enter these areas as more consumers use technology for activities like working out and getting around during the pandemic.
“We’re expanding our addressable market by entering new categories in areas like health and electric bikes that are being disrupted by technology,” CEO Corie Barry said during an investor presentation Thursday. “Forty percent of Americans use digital technology or the internet in new or different ways compared with before the pandemic.”
At the same time, the company plans to close 20 to 30 stores a year over the next three years as it addresses the shift by its customers to shop more online. Best Buy has approximately 1,000 stores in North America.
The company’s sales surged during the pandemic as consumers stuck at home snapped up electronics for their home offices, home gyms and living rooms. But sales are slowing down.
In the last quarter, sales dropped 2.6%, including a worrying 11.2% drop online. Sales of mobile phones, gaming and tablets all declined.
The company is also expecting a sales decline of up to 4% in 2022. After stocking up for the past two years, many consumers have already bought most of the electronics they need, while others are pulling back spending because of higher prices, say analysts.
Close to 40% of Best Buy’s business today comes from online sales, nearly double than before the pandemic. Best Buy is increasingly using its stores to ship online orders to customers’ homes.
“We remain confident about Best Buy,” retail analyst Neil Saunders said in a note to clients Thursday. “It is a solid, well-run business with a clear vision. However, there is no denying that it is now in a more challenging place.”