Consumer

Shelly Banjo is a Bloomberg Gadfly columnist covering retail and consumer goods. She previously was a reporter at Quartz and the Wall Street Journal.

Shira Ovide is a Bloomberg Gadfly columnist covering technology. She previously was a reporter for the Wall Street Journal.

Best Buy's quarterly financial results on Tuesday were downright Amazon-like: Consecutive quarters of double-digit online sales growth. Hot new products including virtual-reality headsets and techy watches. Words like "exploration" and "experimentation."

Gone were the store-closing announcements of quarters past, along with talk of bad weather or other tired excuses for why consumers aren't shopping (many of which we've heard from Target, Macy's and other retailers in recent weeks). Shares surged 19 percent on the news, marking Best Buy's biggest one-day stock gain since 2001.

Big Buy
Best Buy's shares surged 19% on Tuesday, their biggest one-day gain since 2001
Source: Bloomberg
Intraday times are displayed in ET.

For months, Wall Street had fretted about how Best Buy would deal with falling prices for TVs and other gadgets, as well as five straight months of falling U.S. electronics sales, according to the U.S. Census Bureau. Analysts followed by Bloomberg cut their 12-month stock-price target to around $32, from more than $40 last August.

But Best Buy on Tuesday said its comparable sales rose 0.8 percent in the second quarter from the year before, which means the company bucked some scary industry trends. Across the globe, smartphone shipments are forecast to increase just 3 percent this year from 2015, according to research firm IDC, compared to 30 to 50 percent growth rates in prior years. Apple, the biggest seller of tablets, just barely avoided a tenth consecutive quarter of falling iPad sales. Personal computer sales are likely to decline for the fifth straight year. 

Gah Gadgets!
Sales of computers, tablets and smartphones have downshifted into slow-to-negative growth territory
Source: IDC

Those are daunting statistics for any company that sells consumer electronics. But even as the three biggest computing device categories slow, it seems Best Buy is not only holding its own, it's also stealing sales from other, even more challenged retailers. It's also benefiting from closures of its underperforming stores, which no longer weigh on its books.

Plus, it looks like it's finally learning a thing or two from some of its biggest vendors, such as Apple. On Tuesday it outlined a series of pilot programs that sounded awfully Apple-like, including in-store classes on WiFi use and digital photography.

Another initiative pulls a page from former Apple store mastermind Ron Johnson's new startup, Enjoy, which sells high-end consumer electronics online but provides free in-home installation and setup services. Best Buy said it's testing a similar in-home adviser program, as well as on-demand, same-day services for customers who need immediate tech help. 

Perhaps more importantly, the company has also plunged resources into a more-streamlined online checkout process, faster shipping and better website features such as consumer reviews and product recommendations.

Best Buy is late to improving its online offerings; Apple and Amazon have done such things for more than a decade.

Still, its work seems to be paying off: Best Buy's online sales growth has outperformed rivals Walmart and Target for some time now, and they are outpacing the overall U.S. e-commerce market. Online sales now make up more than a tenth of Best Buy's $40 billion in annual revenue.

Clicking Away
Best Buy's online sales are rising at a faster rate than its competitors
Source: Bloomberg, U.S Census Bureau, the companies

Some of Best Buy's efforts may wind up being buzz-generating but short-lived experiments. And it's not clear what took the company so long to realize Amazon and Apple had changed people's expectations about shopping for consumer electronics. But for now it seems Best Buy has finally realized it's 2016. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. Revenue from iPad sales only increased in the June quarter because Apple started selling a more expensive model.

To contact the authors of this story:
Shelly Banjo in New York at sbanjo@bloomberg.net
Shira Ovide in New York at sovide@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net