`Best Buy`s Giant Gamble,`

`Best Buy`s Giant Gamble`

1 . The most controversial as well as unexpected innovation introduced by Brad Anderson occurred in 1989 when the company stopped paying commissions to its sales staff and instead put them on salary (Boyle 2006 . The industry for years had relied on salespeople to promote pricy items to consumers and therefore was eager to link their pay to performance in a clear , demonstrative manner . The concern was that from that on salespeople will have less motivation to increase sales volumes however , the move proved a wise decision because it

also made the atmosphere in the stores less reminiscent of aggressive salesmanship and allowed the company to get ahead of its competitors

The results are clearly showing the advantage of this low-pressure model as sales volume had increased at the rate of 25 a year (Boyle , 2006 Today , Best Buy is the market leader and accounts for 17 of the consumer electronics retail market , which is an impressive figure (Boyle , 2006

2 . The idea of customer centricity originated from the concept of replacing salesmanship with catering to customers . The radical transformation started only now , and in the third-quarter the uncouth implementation of the plan had cost Best Buy a 12 in its stock price Best Buy in its 2005 annual report defines centricity as a strategy that involves identifying profitable customer segments , tailoring our store experience to satisfy their needs , and training our employees to think and behave as owner /operator

The concept of centricity in Anderson 's mind was based on a simple approach : cultivate the customers that make the company the most money (angels ) and limit spending on those that are not lucrative in terms of sales (demons . Angels were sorted out , and each category was given a name label . Then , stores were set up to target specific categories instead of the generic population . The focus was on five most profitable groups : Barry is an affluent tech enthusiast Jill , a busy suburban mom Buzz , a young gadget fiend Ray , a price-conscious family guy and Mr . Storefront owns a small business (Boyle , 2006

A store could be set up to target one of more categories : there is a Jill store , a Buzz /Ray store etc . The positioning reflects the special training that is offered to store assistants such as personal shopping assistants (PSAs ) in Jill stores . The design and selection of items also targets a specific category

Centricity is certainly a risky idea since it takes a lot of investment to remodel the store , and there is no guarantee that clients will catch on . It represents , however , the cornerstone of what Anderson is doing to revolutionize the retail chain , and involves ideas that are novel to the industry . Instead of offering the lowest price , Best Buy is shifting into bundling its offerings with customized approach and services - concepts represented by centricity and acquisition of the Geek Squad

3 . The purchase of the Geek Squad , a Minneapolis startup that specialized in repairing and installing PCs ' with an annual...