In today’s article, we’ll take a look at the swot analysis of the best buy of one of the biggest electronics retailers in the world.
Best Buy, a Minnesota-based electronics shop, has been in business for more than 50 years. As a result, the company is not just surviving, but actually flourishing. With 1,779 stores and $39.49 billion in revenue in July 2015, Best Buy Co. remains one of the biggest owners of US consumer electronics retailers.
According to Statista, Best Buy was the sixth-largest e-commerce website in the U.S., with over 31 million unique visitors per month.
In the current market, Best Buy is one of the few electronics stores that has both survived and grown well.
Despite intense rivalry from a wide range of opponents, it has been able to maintain its position and generate a reasonable profit.
In this section, we will discuss the Best Buy SWOT analysis and other internal factors that have influenced its growth.
Complete Best Buy SWOT Analysis Essay
Best Buy’s Strengths
Best Buy reaps the rewards of its position as the world’s largest and most influential retailer of electronic goods. The company has over 1,231 stores located in the United States; Europe; Turkey; China; and Canada.
An Innovative Sales-Service Strategy
Most clients have a hard time figuring out which devices are best for them since they don’t know much about them.
The company provides resources for brand comparison and expert guidance, as well as service for all of the gadgets it sells. This has shown Best Buy to be tech centrist in its approach to this problem.
Best Buy has made a number of smart purchases over the past several years that have allowed the company to take advantage of profitable prospects. Great Call and its toolset, Critical Signal Technologies, were bought by Best Buy in 2018 and 2019 respectively, allowing it to enter the senior health market ahead of the competition.
Excellent Customer Service
Best Buy puts the satisfaction of its customers first in everything.
It prioritizes the needs of its consumers, ensuring that they get the assistance they need from a store employee or the Geek Squad’s tech support team.
Customers are more likely to remain and make purchases at a store with a strong marketing strategy like this. The more time spent shopping, the more money spent. Because it put a lot of money into its e-commerce strategy, Best Buy was able to boost sales both online and in-store.
The BOPIS Mix
Customers may return 93% of their online purchases to a Best Buy store, where they are processed. Customers can now pick up their orders at UPS and CVS stores. The fact that BOPIS sales at Best Buy went up by 40% shows how well this special combination works.
Bad Public Relations
This contact between the CEO and an executive from another firm was discovered in January 2020. To begin with, this accusation generates bad PR. As a result of the allegations, customers have lost faith in the firm.
Heavy Reliance on Electronics
The corporation’s reliance on electronics is vulnerable. There is always something new to learn about technology. Like all things, technology is ever-evolving. As opposed to that, this firm’s core competency is just electronics, instead of focusing on technological products generally.
Extremely reliant on supplier credit
As a result of being heavily reliant on supplier credit, many of the things at Best Buy stores are unpaid for. Instead, the items are shipped to retail locations, where they are sold and the producer is compensated. After a certain amount of time, Best Buy may be required to pay for the inventory if it does not sell.
Physical Stores: Huge Expenses
Online merchants have lower operating costs than physical store establishments. Warehouse storage costs less than running a physical store. Rent, utilities, property taxes, and staff wages are just a few of the monthly expenses that must be paid by a business.
Emphasis is placed on luxury
Dependent on the selling of high-priced luxury goods, such as video games, whose popularity might plummet in the event of a weak economy.
Health Concerns for the Elderly
Morgan Stanley estimates that Best Buy could make more money from healthcare products than it could from electronics. It’s a gold mine to cater to the needs of the elderly. Best Buy now has a strong foothold in the growing market for health-related products for the elderly, thanks to its acquisition of Great Call.
Increasing Online Sales
Best Buy has utilized e-commerce well, and there is always potential for improvement. It should aspire to reach Amazon’s degree of online retail acceptance. The company’s online sales amounted to 25% of overall revenues as of February 2020, and there is still a long way for the company to go.
Increased presence in developing countries
Because the majority of its locations are in the United States, Best Buy should be expanding internationally. As competitive as the UK market is, Best Buy is still able to compete and prosper in new and developing areas.
Improve market presence
Would you go to Walmart instead of Best Buy if it’s only a few blocks away? It’s unlikely. To cover the gaps and reduce the distance, Best Buy has to establish more locations.
Grow Through Acquisition
Strategic purchases have already paid dividends for the store. As long as acquisitions continue to be made, the company will continue to grow. The downfall of Sears is one reason why it’s ripe for the picking.
The Imminent Recession
Any firm that thinks it is immune to a downturn in the economy would be foolish. Due to the effects of the pandemic recession, Best Buy’s meteoric rise may end quickly and without warning.
Increase in Counterfeits
Without any doubt, Best Buy is the best target for counterfeiters and imitators because of their reliance on technology. The modern age’s counterfeits are of great quality yet at a low price. Even for longtime Best Buy customers, this deal is too good to pass up.
Threat from competitors
In the United States, retail faces a significant competitive threat. Not only have brick-and-mortar competitors invested heavily in developing digital skills over the last few years, but e-commerce competitors like Amazon pose an even greater threat to Best Buy’s company. To increase sales, retailers have implemented an omnichannel approach.
Since online technologies play a growing role in sales and profits, the distinction between e-commerce and traditional retail has begun to blur. Best Buy will need to place a significant emphasis on online sales and advertising to bolster its competitive advantage.
In addition, it will need to make investments in digital supply chain capabilities in order to generate solid growth. Amazon has arisen as an incredible threat to physical stores across the United States.
Its aggressive pricing, vast product selection, unrivalled technology expertise, and robust market presence pose a serious threat towards other retail companies. Additionally, the e-commerce giant is investing millions in its private-label products to cannibalise the sales of other retailers in the United States.
The implementation of the USMCA has empowered workers not only in the United States but also in neighbouring countries. For example, Best Buy and Home Depot employees in Mexico have gone on strike for higher wages. Strikes are contagious and comparable to infectious diseases.
Final Thoughts On Best Buy SWOT Analysis
It’s no secret that Best Buy is a worldwide online retail big player. They endured a variety of obstacles, from the Economic Crisis of the stock market to the rise of E-Commerce, which has caused many retail stores to close.
The swot analysis of best buy let us know that have huge success potential, and new technologies have opened up new possibilities for the brand. Best Buy’s major strengths are customer service and client satisfaction, while the company’s major weakness is the limited availability of stores in certain countries.