Holiday sales increase reflects consumer environment: National Retail Federation CEO
National Retail Federation president and CEO Matthew Shay says consumers have been ‘driving the economy’ since May when coronavirus lockdowns were lifted across the country.
Best Buy has redesigned four stores in the Twin Cities area to help meet the surge in demand for online orders ahead of the holiday season. The remodels, which include the company's Shakopee, Burnsville, Eagan and Apple Valley locations, were completed in November.
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BEST BUY 3Q SALES RISE 21% AS CONSUMERS CONTINUE BUYING HOME PRODUCTS
Best Buy CEO Corie Barry mentioned the remodeling plans during the company's third-quarter earnings call last month, noting that the retailer was "testing new store formats to test our hypothesis of stores as more primary fulfillment hubs."
At the redesigned Minneapolis stores, the shoppable square footage was decreased from an average of 27,000 square feet to about 15,000 square feet. While customers can still shop the stores' major product categories, including laptops and cellphones, there are fewer items on the sales floor.
Barry said that the remodeled locations would result in additional space for staging products for in-store pickup and to support ship-from-store transactions. In addition, the new stores provide the ability to stage inventory for items that may not be on the safes floor. The company's Eagan location also increased some of its available space for the company's Geek Squad customer support.
"Normally, we would not remodel any stores this close to the holiday season, but we feel it's imperative to move quickly to gain the learnings about how the store format may complement our omnichannel strategy within a particular market," Barry added.
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Barry noted that it would take time to calculate the return on investment for the remodeling due to the pandemic's impact on Best Buy's demand and operations.
"This is the very first foray into fulfillment stores like this. And my guess – not my guess, I know – we will continue to try additional formats and additional ways that we will approach the market as we head into next year," she said. "And so we'll keep you apprised as we learn more, but we definitely want to give this one enough time, especially in a pandemic world where operations are different than what steady state might look like over time."
Best Buy reported a third-quarter profit of $391 million, or $1.48 a share, compared with $293 million, or $1.10 a share, in the year-ago period.
The company's sales rose 21% to $11.85 billion, up from $9.76 billion a year ago. Online sales increased 174% and comprised 35% of Best Buy's total domestic sales for the quarter as the company continues to benefit from customers staying at home due to COVID-19, as well as Prime Day-related sales and holiday promotions.
The company saw strong growth across most of its categories, especially computing and appliances. In addition, Best Buy's home theater category returned to growth and was a significant contributor to the company's 23% domestic comparable sales increase and 27% international sales increase.
Best Buy did not provide a financial outlook, citing "significant uncertainty related to the various impacts of the pandemic."
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