Brendan McDermid/Reuters
- Best Buy plans to open more outlet stores to appeal to "value-focused" shoppers.
- The stores offer open-box appliances and electronics at a discount, as well as device repairs.
- Best Buy forecasts another "down year" for the electronics industry, but expects a rebound in 2024.
Best Buy is planning to open more outlet stores in a bid to attract "value-focused" shoppers.
The electronics retailer is moving away from "a one-size-fits-all model" for its retail footprint. Its plan includes opening 10 outlet stores in the coming year and closing 20 to 30 of its larger-format locations, Best Buy CEO Corie Sue Barry said during a call with investors Thursday. The outlet stores, which Best Buy began opening in 2021, allow customers to shop for open-box electronics and appliances.
"We will open more outlet stores that support our value-focused customers," Barry said. "These stores are driving a higher mix of new and re-engaged customers, in addition to a better financial recovery on open-box and return product."
The outlet stores are equipped to handle more repairs than a traditional Best Buy store as well, which means customers can bring in broken devices or appliances to be repaired by technicians.
Barry called the outlet stores a "unique and differentiated customer experience" and said they could eventually be used to help Best Buy's vendors sell their own refurbished goods, even if they weren't purchased at Best Buy.
Barry also said Thursday that the company plans to continue piloting small-format stores that focus on tech essentials and are more tech-enabled than the brand's standard stores. Customers visiting the smaller stores can video chat with product support and use mobile self-checkout.
"We believe there is an opportunity for these to be growth vehicles in underserved urban neighborhoods, as well as small remote markets," Barry said.
Still, the months ahead are forecast to be challenging for Best Buy, which expects comparable sales to fall 3% to 6% this year. Not only are customers cutting back on discretionary purchases in general, but the consumer electronics sector in particular has struggled after the pandemic-fueled demand for laptops and PCs subsided.
Insider Intelligence predicts computer and consumer electronics sales will grow just 2.5% in 2023 — in 2021, the category grew 13.8%. That boom has made it difficult for Best Buy to grow sales year-over-year, especially since most of its products are only purchased every four to 10 years, according to senior analyst Zak Stambor. (Insider Intelligence is owned by Insider's parent company.)
Barry said Thursday that the company is "preparing for another down year for the [consumer electronics] industry," but expects a rebound in 2024.
"Based on what we can see right now," she said, "we believe that calendar 2023 will be the bottom for the decline in tech demand."