SWOT Analysis of Best Buy
In this post, we are going to analyse the SWOT Analysis of Best Buy as a marketing or business person. A SWOT Analysis is crucial for the success of any business or service.
Founded: August 22, 1966
Founders: Richard M. Schulze, James Wheeler
Headquarters: Richfield, Minnesota, United States
CEO: Corie Barry (Jun 11, 2019–)
Operating Areas: US, Canada, and Puerto Rico
Products: Consumer Electronics, Appliances
Number of Stores: 1179
Revenue: Revenue: 47.26 billion USD (FY Ended January 30, 2021)
Net income: 1.798 billion USD (FY Ended January 30, 2021)
Number of Employees: 102,000
Subsidiaries: Geek Squad, Pacific Sales, Magnolia Audio Video, MORE
Best Buy is a well-reputed company with plenty of functional stores in the United States in consumer electronics. Apart from stores, Best Buy (BestBuy.com) was the 6th largest ecommerce player in 2015 in the world. In today’s competitive market and post-Covid-19 era, Best Buy is one of those companies that manage its position and status. The company made a handsome profit during the crisis and remained competitive. There is no doubt that Best Buy has faced fierce competition from competitors in terms of enormous variety. Compared to Circuit City and Radio Shack, Best Buy is doing really well in terms of profits. This SWOT analysis of Best Buy shows strengths, weaknesses, opportunities, and threats. Let’s jump to the main article.
Strengths of Best Buy | SWOT Analysis of Best Buy
Best Buy is known for its excellent customer service, especially with women. In the United States, women make the most electronics purchases, and the way they deal with their customers is remarkable.
They have gained customer loyalty with their ability and wonderful durable products.
Best Buy has an outstanding marketing strategy in the electronics market.
The biggest strength of Best Buy is its large footprint in the US electronics market with 1179 stores (as of 2021).
They have built strong relationships with famous brands like Apple. It sells different products of Apple such as the Apple Watch and iPhone.
In the ecommerce industry, Best Buy has a wonderful track record. Due to their strong online presence, they have made a decent profit during the lockdown.
They are increasing their product variety in smartphones and video games which is one of the major strengths of Best Buy.
The current revenue of Best Buy is $2.39 billion that we consider its main strong point.
Weaknesses of Best Buy | SWOT Analysis of Best Buy
Best Buy heavily relies on brick-and-mortar, even in the era of ecommerce. It is a big weakness and they faced the consequences during the last two years.
During the year 2015, they experienced a small profit margin that is 1.92 %.
The limited amount of cash is one of the most significant weaknesses of Best Buy, and they reported $149 billion of free cash flow in 2015.
Best Buy is highly reliant upon supplier credit. It means most of the items of Best Buy are not paid for. The company has to pay the amount if the product does not sell.
Best Buy is facing higher expenses of stores. Brick-and-mortar locations are good for them, but their own stores or warehouses require a particular amount of maintenance expenses.
Their luxury items like video games are highly popular among users, but this thing over-shades other products. If anything happens with the economy, their sale will be in deep trouble.
Opportunities for Best Buy | SWOT Analysis of Best Buy
You can easily predict that the future is all about technology such as smartphones, smart devices, electronics, video games, you name it, so Best Buy has a wonderful opportunity to increase their product portfolio so that they can attract more customers.
Newly launched products from popular brands like Google, Samsung, and Apple can help to attract new users. Best Buy should consider these brands in their advertisements.
They must update their smartphone section in order to get consumer interest. This thing will help to increase their sales as well as reach.
The failure of competitors provides a wonderful opportunity for Best Buy to strengthen its presence in the electronics sector. Circuit City and Radio Shack are two major competitors of Best Buy and they fail to deliver during the pandemic.
With effective marketing strategies like Black Friday or Christmas, Best Buy can generate more profit and catch customer interest.
Focusing on the latest technologies and devices provides an amazing chance for boosting sales.
They can easily target kids as well as adults with streaming videos, video games, and high-quality smart devices.
Threats to Best Buy | SWOT Analysis of Best Buy
Digital transfer of data such as games, videos, and audio can threaten the profits of Best Buy. It can reduce the foot traffic of Best Buy.
Online platforms like Amazon, Netflix, Google, and Apple can replace the brick-and-mortar stores, which directly affects the sales of Best Buy.
Online retailers are giving amazing discounts on products, including electronics. So, people prefer to buy electronics from these online retailers like Amazon, eBay, Newegg, and more. This can threaten the revenue of the company.
New devices like 3D TVs are present at discounted prices on various online platforms. They are enough to catch consumer interest and it is a big sign of worry for Best Buy and they should focus on these things.
Gen-Z loves online shopping instead of visiting stores. Best Buy does not have a strong online presence, which can create problems in the future.
The economic recession is another big threat for Best Buy.
The difference in the store and online prices of online retailers can cause problems for Best Buy.
Direct sales of appliances and smart devices from Apple and Samsung can cause significant damage to Best Buy in profits.
Currently, customers check the prices of a product from different retailers and prefer the one that offers the best rates. So, customer loyalty has changed, which is a problematic thing for companies.
Retailers like Target and Walmart are continuously increasing their operations and products in order to fulfill the growing demands of users. It can create trouble for Best Buy and threaten its profitability.
Technology is growing day by day and the products that generate the most profits for Best Buy can be obsolete. You can take the example of PCs and laptops here. Tabs are replacing even laptops these days. This could be the biggest threat.
With continuous improvement and effective marketing, Best Buy can achieve the No.1 spot in the electronics sector. They need to adapt their offerings in order to make profits. There is no doubt that the electronics market is highly competitive, and Best Buy should upgrade its selling style and products to remain competitive.