Best Buy Integrates Business Growth and Brand Mission
Depending on your perspective, that Best Buy is buying Napster, a former competitor in the digital music subscription business, may be as remarkable as Best Buy having a brand mission that doesn’t mention consumer electronics. In fact, these two facts really point to an important one — the integration of business growth and brand mission.
First the business growth. The Napster acquisition is the latest in a series of bold moves the company has made to grow its portfolio of businesses. Starting back as far as 2000, Best Buy recognized the value of specialty brands that focus on specific market segments or services and so it began a deliberate march toward acquisition-based growth. It purchased Magnolia Hi-Fi and built store-within-a-store home theater concepts with it. In 2002 it acquired Geek Squad, a 24-hour computer support taskforce, gaining instant credibility through a proven player in the fragmented small business IT service business. More recently its acquisition of CarPhone Warehouse‘s retail division gave the company access to the lucrative mobile business in Europe.
Along the way they’ve also plotted other business growth moves like installing vending kiosks inside eight major airports across the country as part of a new pilot program called “Best Buy Express,” reaching an agreement with Apple to be the only retailer outside of Apple stores and AT&T to sell its newest iPhone, and entering the musical instrument business in select stores.
All of this is being done in pursuit of a rather aggressive business goal — double annual sales to $80 billion over the next five years.
The brand mission side of the story is similarly bold. The company’s website asserts, “Technology makes a lot of promises, and we’re here to make it live it up to those promises. For people.”
The letter from Brad Anderson, the firm’s CEO, in the company’s latest annual report explains: “We believe that to realize the many potential benefits of [the transformative changes of today’s age], our customers will need a friend who can help them enable their dreams of digital connectivity—and that we will be that friend, through the talents of our employees.” So Best Buy is first and foremost about helping customers get what technology can do for them — not about having the coolest products or the best stores.
In fact, in a separate video, Anderson says, “We’re trying to provide for our customers a solution for how they individually enter the digital age. One of the best methods we use today is we run retail stores – whether that’s true 10 years from now, even 5 years from now, is it a fundamental way we operate? I don’t know — the fundamental thing is are we actually aligned with our customers needs?”
I find this stance refreshing. The company isn’t defining their brand by the current competitive landscape or by one-size-fits-all distribution model or by a product platform that will prove difficult to sustain. They’re thinking about the intimate and influential role they can play for customers and building their brand — and their business — around that vision.
Indeed Best Buy has a lot of balls in the air and it will take an extreme focus on execution in order to manage its aggressive growth — but I’m optimistic about the future of a company that aligns integrates its business growth and brand mission so well.
And current indicators look good. Despite a depressing consumer sentiment and economic pressures that have felled some of retails’ giants lately, Best Buy was able to report strong 2nd quarter results today — total quarterly revenue increased 12 percent to $9.8 billion, driven by gains from new store openings and a comparable store sales increase of 4.2 percent.