Thursday, January 21, 2010

BBY Warehouse

Today’s update is going to dive into my ideas for a new concept of a Best Buy store. This concept would change the floor plan around to expand the warehouse portion to cover about 80-90% of the building. Customers would still have access to Blue Shirts, a Geek Squad precinct, and customer kiosks. The point of this design is to lower costs, maximize customer experience, and prepare for the digital content laden future.

Let’s look at the lowered costs first. One of the reasons that online retailers are able to offer very low prices is because of their lack of overhead (i.e. retail locations). This concept allows for fewer employees working in the building by putting a large focus on pickup and via kiosk sales. We would also configure the warehouse portion of this concept to mimic our current DC/DDC facilities, to ensure that we can pull product quickly. By doing this we better utilize the floor space we are provided thus reducing the impact of rent/mortgage on the price of the individual product.

Next, let’s examine the customer experience. In the customer accessible portion of the store we would have displays like in a normal store, but these would be 10% of the normal number. The biggest change in merchandising would be the use of 3D displays on our kiosks to demonstrate the products that are not on display. Another change would be a consultation area where customers sit down with an expert to discuss what they want to be able to do and then we build the solution they will need to accomplish that goal.

In the future where downloaded content is a more consistent means for customers acquiring media products, there will be several products that we will either no longer sell, or will be sold in a very diminished quantity (i.e. CDs, DVDs, Video Games). This concept prepares for that eventuality by creating a store with a low dependence on “browseable” media for customer traffic.

Keep in mind that this concept isn’t meant as a direct replacement of our current store, but as a modular add-on to the other stores in a district. It’s position in a district should be near as many stores as possible, but at the same time as far from the current DC/DDC as well. This concept will allow for more inventory on-hand, along with supplementing our supply chain as a warehouse hub. Depending on its placement this concept store would be able to bolster other stores’ inventories by using systems like OMS for customer pick-ups.

This concept store would also be a delivery hub, doing deliveries of large TVs, appliances, and orders depending on the size of the location. For instance, if we test this concept with an existing DDC, it would continue to perform all of its current roles and add customer service. Which based on customer feedback could help the DDC quite considerably with the way they handle customer calls, but that is for a different blog update.

In closing this concept would allow for a brick and mortar store to compete more directly with the pricing of an online retailer. We could offer a discount for products purchased in this store as a direct reflection of the money we have saved by moving to this model, without creating an actual business plan I wouldn’t be able to speak to the actual number of that discount, but it would be in the range of 10-20% off of the normal price. This could be a huge motivator for our customers to shop in this store.

As normal I would like to hear some feedback on this, please let me know what you think in the comments section.

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