How were the competitive and customer trends adversely affecting best Buy’s mark

Question

How were the competitive and customer trends adversely affecting best Buy’s market position?

Competitors A sluggish economy and brutal competition chipped away at Best Buy's once dominant presence in the consumer electronics market. In addition, consumers' determination to find bargain prices online and willingness to engage with brands on multiple channels, as well as the rising popularity of Internet retailers such as Amazon had gradually eroded Best Buy's competitive position. Best Buy found itself in a battle not only with Amazon but also other big-box retailers such as Target, Walmart, and Sears, which began offering consumer electronics in their stores and online. Amazon Founded in 1994, the online behemoth Amazon had changed the face of traditional retail by offering a vast product selection, low prices, and relentless innovation. Its information-rich product pages made it a destination for product research (see Exhibit 1).4 Amazon also exercised influence over offline retail, drawing shoppers to its site before and even during their in-store visits. Amazon's competitive advantage lay in the sheer breadth of product choices it offered shoppers, the convenience of shopping from home (or anywhere), personalization, efficient customer service, and a well-developed delivery network of warehouses and strategically placed fulfillment centers that allowed it to cut shipping costs. Already ruthlessly efficient, Amazon in 2005 launched its Prime subscription service that for a flat annual fee offered members expedited (two-day) shipping with no minimum purchase amount. Target In May 2014, America's second-largest discount retailer, Target, announced that it would enhance in-store, mobile, and online services to provide shoppers with a superior experience. Target's digital platforms included the coupon app Cartwheel, Target Subscriptions, and its online store. It planned upgrades to the Target app such as smart shopping lists, personalized offers, and expanded offerings in the electronics department. The company offered free in-store pickup services and planned to add a “ship-from-store" feature to give shoppers the added convenience of shopping online for same- or next-day delivery. Indeed, Target rolled out a ship-from-store program in 140 stores ahead of the 2014 holiday season that enabled it to reach an estimated 91 percent of U.S. households by ground transit within a couple of days. Target was playing catch-up with Best Buy, which was already shipping from all of its stores by the time Target announced this feature. Best Buy had introduced ship-from-store in 400 stores during the 2013 holiday season and was shipping from all stores by January 2014.

Explanation / Answer

How were the competitive and customer trends adversely affecting best Buy’s market position?

Competitors A sluggish economy and brutal competition chipped away at Best Buy's once dominant presence in the consumer electronics market. In addition, consumers' determination to find bargain prices online and willingness to engage with brands on multiple channels, as well as the rising popularity of Internet retailers such as Amazon had gradually eroded Best Buy's competitive position. Best Buy found itself in a battle not only with Amazon but also other big-box retailers such as Target, Walmart, and Sears, which began offering consumer electronics in their stores and online. Amazon Founded in 1994, the online behemoth Amazon had changed the face of traditional retail by offering a vast product selection, low prices, and relentless innovation. Its information-rich product pages made it a destination for product research (see Exhibit 1).4 Amazon also exercised influence over offline retail, drawing shoppers to its site before and even during their in-store visits. Amazon's competitive advantage lay in the sheer breadth of product choices it offered shoppers, the convenience of shopping from home (or anywhere), personalization, efficient customer service, and a well-developed delivery network of warehouses and strategically placed fulfillment centers that allowed it to cut shipping costs. Already ruthlessly efficient, Amazon in 2005 launched its Prime subscription service that for a flat annual fee offered members expedited (two-day) shipping with no minimum purchase amount. Target In May 2014, America's second-largest discount retailer, Target, announced that it would enhance in-store, mobile, and online services to provide shoppers with a superior experience. Target's digital platforms included the coupon app Cartwheel, Target Subscriptions, and its online store. It planned upgrades to the Target app such as smart shopping lists, personalized offers, and expanded offerings in the electronics department. The company offered free in-store pickup services and planned to add a “ship-from-store" feature to give shoppers the added convenience of shopping online for same- or next-day delivery. Indeed, Target rolled out a ship-from-store program in 140 stores ahead of the 2014 holiday season that enabled it to reach an estimated 91 percent of U.S. households by ground transit within a couple of days. Target was playing catch-up with Best Buy, which was already shipping from all of its stores by the time Target announced this feature. Best Buy had introduced ship-from-store in 400 stores during the 2013 holiday season and was shipping from all stores by January 2014.

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