Best Buy will leverage its membership-based loyalty program to sharpen personalization efforts for its 2025 fiscal year, which began Jan. 29, 2024. The retailer also plans to concentrate on updating and refreshing existing stores rather than opening new brick-and-mortar locations, as well as “improving and livening the merchandising presentation given the shift to digital shopping and corresponding lower need to hold as much inventory on the sales floor,” said Corie Barry, CEO, during a conference call discussing Best Buy’s Q4 and FY2024 financial results.
The retailer “will be removing physical media and updating our mobile, digital imaging, computing, tablets and smart home departments,” said Barry. “We are also excited to partner even more with our vendors this year as it relates to their branded in-store merchandise experiences,” Barry added, identifying Tesla, Lovesac and Starlink as examples of planned vendor partnerships.
Best Buy closed 24 stores in FY 2024 and plans to close 10 to 15 in FY 2025. While the retailer will be focused on improving existing store experiences at scale moving forward, Best Buy is planning to “open a few additional outlet centers and new formats to continue to test two important concepts,” said Barry.
“First, we will open small locations in a couple of markets where we have no prior physical presence and our omnichannel sales penetration is low, to measure our ability to capture untapped share,” said Barry. “Second, we will test our ability to close a large format store and open a small format store nearby, thereby maximizing physical store retention through convenience. These learnings will collectively continue to help us refine our forward-looking store strategy.”
Advertisement
‘Increasingly Personalized, Highly Relevant and Motivational Content’
Noting that Best Buy can attribute “roughly 90% of our revenue to known customers,” Barry explained how the retailer would use its loyalty program to elevate personalization. The retailer added paid membership tiers to its program in May 2023, and Barry reported that the two-tiered My Best Buy programs had 7 million members at the end of FY2024.
“We’re creating seamless, tailored experiences for our members based on their unique preferences or context,” said Barry. “Our App First member deals experience is a great example of this. Rather than bombarding our members with thousands of great member deals, we focus on the most relevant offers based on their preferences and observed member data. Additionally, we’re adding personalization across the membership journey, including in-store at POS where later this year we’ll include prompts to provide both sales associates and customers with relevant contextual information about their membership, like their savings, rewards, protection plans and offers. We will also include personalized dynamic messaging in our communications to members about their upcoming program renewals. These efforts and more will serve to increase membership engagement and continue to improve retention.”
Barry noted that Best Buy’s wealth of first-party customer data gives it an advantage in its personalization efforts, particularly with its mobile app. “We are currently testing a personalization-centric version of the app homepage with the stories and actions that matter most to customers, along with critical content, and plan to launch to all customers during the second quarter,” said Barry.
Best Buy also is continuing to seek out additional revenue streams beyond its stores and ecommerce business. The retailer expanded its home health care services in partnership with Mass General Brigham hospital in November 2023, following a partnership with Atrium Health that began in March 2023.
For Q4 2024, Best Buy’s comp sales fell 4.8% compared to the same period the previous year. Revenue of $14.6 billion for the quarter represented a 0.6% drop from the $14.7 billion generated in Q4 2023. For the full fiscal year, 2024’s revenue of $43.5 billion was down 6% from 2023’s $46.3 billion.
