How Best Buy built up its brand by focusing on customers

Burnaby-based electronics retailer Best Buy Canada turned the demise of subsidiary Future Shop into an opportunity for a brand recharge

Burnaby-based electronics retailer Best Buy Canada turned the demise of subsidiary Future Shop into an opportunity for a brand recharge

Late last November, a video shot at a Best Buy store in Halifax went big on Twitter. The scene: staff lined up near the front door, applauding, as dozens of customers strolled in to kick off Black Friday. That week on The Tonight Show, host Jimmy Fallon used the footage to illustrate the difference between Americans and Canadians. After playing a clip of a mob trampling fellow shoppers to snatch a coveted item at a store somewhere in the U.S., Fallon cued the Best Buy video. “Single file!” he sputtered, incredulous. “Clapping!”

Canadians are polite—we get it. But for Angela Scardillo (pictured above), vice-president of marketing and communications at the Burnaby-based headquarters of Best Buy Canada, the video revealed the new strength of the company’s brand. After Minneapolis-headquartered Best Buy Co. Inc. shut down Future Shop in March 2015—closing 66 stores across Canada and converting another 65 into Best Buy locations—the Canadian division of the big-box electronics retailer had to find a new way forward. “That was the impetus for us to really focus on one brand and then create an entirely new culture that we all rally behind,” Scardillo recalls. “So we focused on creating an amazing customer experience.”

Best Buy encourages staff to make small gestures to improve that experience, Scardillo says. The recent show of goodwill in Halifax is a switch from the commission-driven ethos of Future Shop, where sales tactics included pushing costly extended warranties.

In 2001, when Best Buy entered Canada by purchasing Future Shop, it was widely expected to wind down that brand. Instead, the company stuck with Future Shop as it opened its own stores, often in the same malls. “There was kind of a motherhood rule of thumb back then that in Canada, with our concentration of population around major markets, we could sustain two major retailers in any category,” says David Ian Gray, founder of Vancouver-based retail strategy firm DIG360. “So they kept Future Shop to give customers choice.”

A decade ago, Best Buy was one of the biggest global retail stories, highly profitable and innovative, Gray notes. But over the next several years, the landscape changed for several reasons. The 2008-09 financial crisis made consumers in the U.S. and elsewhere more budget-conscious. Apple Inc. had launched its own hugely popular stores in 2001, and in 2009, Microsoft Corp. followed suit. Meanwhile, online retailers, especially Inc., were stealing customers. Showrooming—shoppers browsing products in a store and then looking for better prices on the web—became a big problem.

“All these things erode,” Gray explains. “Best Buy is in a really tough category. They’re continually trying to find a formula to reinvent it. And it’s hard.”

In 2012, Best Buy hired Hubert Joly, a veteran of the media and travel industries, as CEO to turn the struggling business around. Joly’s strategies included bringing in a price-matching policy to keep customers and introducing mini-stores within Best Buy locations, for companies such as Apple, Samsung and Sony Corp. He also improved online shopping by making each store capable of fulfilling orders when a distribution centre ran out of an item.

Closing Future Shop in Canada was a cost-cutting measure. That decision and the focus on a single brand is paying off, according to Scardillo. Our Most Influential Brands survey seems to support that view: Best Buy is No. 10, surging nine spots over last year.

Scardillo says Best Buy Canada, with some 1,100 employees at its Burnaby headquarters, plus 2,800 staff at 22 big-box and 10 Best Buy mobile stores in B.C., has considerable autonomy over areas like marketing and purchasing. Geek Squad, a technology help service set up by Joly, is managed out of the Burnaby office. One strategy unique to Canada: offering certain lines of merchandise, including luggage, online only.

In November, Google opened a Vancouver mini-store at Best Buy’s Cambie Street location; it’s one of four flagship outlets across the country that were the first for the search engine giant in North America. Visitors can try out Google’s products, including the new Daydream View virtual reality headset. Portal, a multi-screen interactive display, lets shoppers “fly” over anywhere on the planet via Google Earth.

“As customers change the way that they’ve been shopping, our focus is on these stores that really work with our vendor partners to bring experiences to life,” Scardillo says. “We know that technology can be complicated, so we’ve focused on creating an emotional connection with our customer and showing how technology can make people’s lives better.”