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Best Buy Co., Inc. (BBY): A Comprehensive Look

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Best Buy Co., Inc. (NYSE:BBY) was the one-time market leader in selling consumer electronics. It was growing bigger and better and benefiting from opening big stores in prime locations. But then along came Amazon.com, Inc. (NASDAQ:AMZN), trampling on everything that Best Buy Co., Inc. (NYSE:BBY) had created.

Best Buy Co., Inc.The huge stores that Best Buy Co., Inc. (NYSE:BBY) built became liabilities instead of assets. While Best Buy Co., Inc. (NYSE:BBY) invested in big stores, products and salespersons, Amazon.com, Inc. (NASDAQ:AMZN) was ringing the cash registers due to its lower prices. Best Buy Co., Inc. (NYSE:BBY) was nothing but a showroom, as consumers entered the stores but ended up buying from Amazon.com, Inc. (NASDAQ:AMZN).

Since then the company has suffered continuous losses – on the profitability front as well as reputation front. However, the company is seeing the light of the day as Richard Schulze has finally given up on taking Best Buy Co., Inc. (NYSE:BBY) private. The company posted positive same-store sales of 0.9% in the US after two years of decline. Further, the company is on track to get its business model right and is trying to capitalize on the benefits of scale and location.

Price-matching policy

After continuous decline with its showrooming, Best Buy finally acknowledged that it was a factor that was eating into its sales. During the recent holiday season, it announced a price-matching policy. It worked. It announced better-than-expected results and reported a 11% increase in its online sales in its fourth quarter.

Going forward, it has decided to make its holiday price-matching policy permanent, thereby aiming to end the showrooming practice. Further, it also entered into a partnership with Red Laser, a mobile app that enables Best Buy to push coupons and also suggests one-click ordering for its customers before they decide to flee the store.

Looking at the big-ticket items like TVs, computers, etc., there isn’t much disparity between prices. This is what the company is trying to achieve. The company is trying hard to break the perception that Best Buy’s prices are higher than Amazon.com, Inc. (NASDAQ:AMZN)’s.

The holiday matching-price policy has paid off for the company, and I wouldn’t be surprised if going forward Best Buy resorts to an all-out pricing war to increase its market share.

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