Best Buy leaders went to Wall Street on Wednesday to provide an update on our Building the New Blue growth strategy.
Best Buy CEO Corie Barry, President and Chief Operating Officer Mike Mohan, Chief Financial Officer Matt Bilunas and other members of the executive team highlighted the progress we’ve made since unveiling the plan at our 2017 Investor Day. They also detailed how we plan to move forward with the next phase of the strategy, called Building the New Blue: Chapter Two, and discussed our long-term financial outlook.
“While the strategy has been updated, our purpose remains the same: We are here to enrich lives through technology,” Corie said. “This is not a tagline, it is who we are at our core and represents the promise that tech brings to our lives every single day.”
Here’s an overview of what they talked about.
Best Buy has grown its top and bottom lines significantly in the two years since our 2017 Investor Day. In fact, we’ve nearly reached our fiscal 2021 financial goals two years ahead of schedule.
In addition to the financial success, we have accomplished a great deal toward our overall strategic goals during that time. Key examples include:
- Growing our In-Home Consultation program to more than 600 advisors
- Expanding Total Tech Support to almost 2 million members
- Making three acquisitions to advance our Best Buy Health business
- Transforming our supply chain to improve the speed of delivery to customers
“Our strategy is the right one, and it’s working,” Corie said.
Most importantly, we’ve funded our investments through continued cost reductions and efficiencies. We achieved $730 million in cost savings during the first phase of Building the New Blue, bringing us to a total of $2.1 billion since the fourth quarter of fiscal 2013.
Delivering on business outcomes
We believe there are four distinct ways our strategy will unlock profitable growth.
We can better serve existing customers, illustrating for them the art of what is possible and creating deeper relationships — and, as a result, growing our share of wallet.
We have rolled out a new field operating model to create a more seamless experience for our customers, market by market.
We’re also leveraging our in-home services and our paid and free membership programs to drive brand love and grow significant relationships.
“Better serving customers will require us to move beyond the idea of multichannel retail to something never seen before,” Mike said. “We are moving toward being a trusted omnipresent retailer, one who knows you and will help you truly enrich your life with technology.”
We can capture new demand, attracting new customers to Best Buy through unique offerings and services.
An example of this is our new Lease-To-Own program, which launched earlier this year and is now available in 36 states. We’ll add nine states, including California and New York, in late October.
We’ll also capture demand from new vendor partnerships. We’ve expanded our relationship with Google Shopping, become the largest Apple Authorized Service Provider, started working with Home Advisor on a lead-generation program and added some additional accessories to our partnership with Amazon.
We will enter new spaces, like health, where technology is rapidly evolving and where we can leverage our strengths in ways that enrich the lives of seniors, their families and caregivers.<
Our strategy includes curating and selling health tech to consumers, scaling GreatCall’s remote monitoring-based solutions and working with insurers to provide our services as a standard benefit within insurance plans.
“Our mission is simple: enable seniors to live longer in their own homes with the help of technology and support,” said Asheesh Saksena, president of Best Buy Health.
We will build capabilities while maintaining profitability over time. We’ll continue to create efficiencies to help fund investments in our people, technology, pricing, stores, fulfillment, partnerships and acquisitions.
“We will continue to play to win, leveraging our position of strength by investing back into our business,” Matt said.
A key example of how we’re doing this is in supply chain, where we’ve made significant investments to improve our speed of delivery. We’ve added automation at seven distribution centers, introduced new small-footprint fulfillment centers in our densest markets and increased our distribution network by more than 3 million square feet.
“Like everything at Best Buy, it always starts with the customer,” said Rob Bass, chief supply chain officer. “Our customers want and deserve convenient, fast options to receive our great products — and they want it on their terms.”
Our long-term goals
As we turn the page to Building the New Blue: Chapter Two, we have set a series of achievable but aggressive targets for ourselves.
We announced the following employee and customer goals for fiscal 2025:
- Be one of the best places to work in America, appearing on Forbes’ 100 Best Companies to Work For list.
- Double our significant customer relationship events to 50 million. That target includes Total Tech Support and other paid memberships, homes visited via In-Home Consultation and other services, active digital engagement on our mobile app, financial services provided and senior lives supported.
Additionally, we have set new fiscal 2025 financial goals:
- Enterprise revenue of $50 billion, which compares to the company’s current fiscal 2020 guidance of $43.1 billion to $43.6 billion.
- Non-GAAP operating income rate of 5.0%, which compares to the company’s current fiscal 2020 guidance of flat to slightly up from 4.6% in 2019.
- $1 billion of additional cost reductions and efficiencies.
A video webcast of the presentations and question-and-answer session is available online at www.investors.bestbuy.com.