Best Buy’s turnaround strategy might contain a fatal flaw.
In order to compete with e-commerce giant Amazon, Best Buy has promised to pour money into training store associated to be more knowledgeable about products, writes Doug Stephens, founder of industry website Retail Prophet and author of “The Retail Revival: Re-Imagining Business for the New Age of Consumerism.”
The company also started aggressively price-matching to ensure customers got the lowest price at Best Buy.
Stephens points out that this two-prong strategy is actually a paradox.
“A chain like Best Buy cannot pour significant costs into training while at the same time wading into the deep, dark water of price competition with Amazon, which it has done through its price matching policy,” Stephens writes on his blog. “It’s simply not mathematically possible or strategically wise to attempt to do both.”
Training and educating workers on products takes time and money. Workers who are experts on the product generally expect to make more than minimum-wage.
This is a problem for Best Buy, which has promised to offer the absolute lowest prices.
Paying workers more might not put the company in a position to follow through.
“Any retailer who is serious about hiring, training and retaining true product experts, cannot simultaneously be the low-price leader in the market,” Stephens writes.
He believes that Best Buy and other retailers will begin resorting to artificial intelligence in stores to fill the information gap.
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