The video narrates the full arc of Best Buy, from its accidental birth after a 1981 tornado to its dominance as a super‑store chain by 2000, the collapse of rivals like Circuit City, RadioShack and Fry’s, and the severe 2012 crisis triggered by showrooming and a leadership scandal. It then details the turnaround under French‑born hospitality executive Hubert Joly, who introduced an Amazon price‑match guarantee, slashed $2 billion in costs while protecting floor staff, and re‑engineered the business around knowledgeable salespeople, omnichannel pickup, "stores‑within‑a‑store" vendor partnerships, and the Geek Squad service model. The narrative concludes with Best Buy’s current health – $47 billion in sales, a growing subscription base (My Best Buy Total >7 million), and expansion into health‑tech – illustrating how the retailer leveraged its massive footprint and service expertise to survive in an e‑commerce‑dominated world.
Chapters
RadioShack, Circuit City, Fry's, all electronics chains that died in the 2000s. Well, and there's one guy still standing. These guys, Best Buy. Well, how the hell did that happen? Well, the story of how they figured out how to survive in an age of Amazon, Walmart, and all these other killers is a fascinating one. And that's what this video is about. Best Buy actually got started because of a tornado back in 1981. An entrepreneur named Dick Schultz was running an electronics store and it got hit by a tornado. So he took all of his inventory, added a bunch of other stuff to it, and then did a rock bottom sale. Pick up whatever you want out in the parking lot of his former store. Seeing that customers love this superstore style format, he renamed his store Best Buy and in 1983 changed it all to the superstore style format that you see today. It was all about high volume over high margins. It worked so well that by 2000, The chain got so big that they surpassed Circuit City in terms of sales and revenue. It turns out that customers like selection much more than pushy salespeople. By 2012, Best Buy's number one competitor, Circuit City, had declared bankruptcy. Fry's was on its last legs and would close late in the 2010s. And the same thing would happen to RadioShack. And at this time, Best Buy itself started to look pretty wobbly too. And Amazon was starting to steal sales from Best Buy through a thing called showrooming. People would show up at a store like this one and then they would get on their phone and realize they could buy it for a few dollars less. From Amazon online. And the same thing that had befallen and killed Circuit City started to kill Best Buy as well. After a pretty horrendous Christmas season when their customer service went really low and orders didn't show up, they were ranked the 6th most hated customer service company in the United States by a survey. The low point came in 2012 when the CEO of Best Buy resigned immediately, having had an inappropriate relationship with a coworker, and it looked like things were bleak for the company. And in the first quarter of 2012, the company posted a $1.7 billion loss and the stock was plummeting as well. It hit $11 a share, which was a far cry from its early 2000s highs. And it looked at that moment like the same thing would happen to Best Buy that happened to all the other chains. But an unlikely hero entered the story. Big thanks to HighLevel for sponsoring this video and helping us pay for our editors. HighLevel is the all-in-one CRM that handles all your emails, texts, funnels, and more all in one place. Think of it like the Swiss Army knife for small businesses. And you can try it for free for 30 days at gohighlevel.com/michaelgirdley. And at this point, Best Buy did something pretty crazy. They brought in a guy as a new CEO who had no electronics or retail experience. He was actually a hospitality executive and was French-born, and they brought him in to turn around Best Buy. At this point, Best Buy had an all-you-can-eat menu of challenges: shareholder problems, cash problems, morale problems, competitive problems. If there was a problem, these guys had it. The first thing Joly did, which was super smart, and good entrepreneurs do this, is they face reality when it's screaming them in the face. And in this case, he recognized that showrooming was a real thing. So he did something audacious and this was something that other retailers have been scared to do. But he went in and he created a price match guarantee against Amazon and a handful of other online retailers, basically saying if you came into Best Buy, they would give you the same price that you could get from any other website. In business, there is no such thing as a free lunch. And this definitely affected both the profitability and the gross margin for the chain. In 2010, they had been operating at 25% gross margin. That dipped over 4% by 2014. But Jolly saw it as a way to win back customers who had been being lost to the internet. To compensate for that, he did something really smart. He went after all costs as ferociously as possible, but he didn't make the same mistake that other chains had made. He didn't touch the showroom floor folks. He just went after every other cost in the business. And there were some easy costs, like he got rid of the company jets, famously flying in the middle row of economy to corporate events. But then he also did really crazy stuff like getting rid of color printing and going exclusively to black and white. Every nickel counts, right? Between 2012 and 2019, the business cut over $2 billion in expenses. $1.3 billion of that came from non-labor areas. Turns out all that printer toner adds up. 70% of Americans live within 15 minutes of a Best Buy. So something Jolly did next was genius. He recognized and thought, how can I make these stores an asset rather than a liability? When I'm trying to compete both with other retailers and Amazon? The first thing he did was recognize that online sales can't really help you choose an electronics product or even figure out what's right for you. So he went and trained and doubled down on making sure all of his people understood everything from the televisions to the washing machines to the cell phones to the VR headsets. And he wanted these people to be partners and knowledgeable consultants to the customers, not just sales clerks. And he pushed Best Buy into a thing called omnichannel retailing, which is a thing that online retailers can't do 'cause they don't have stores like this. The idea being that you place orders online and then you can come pick 'em up right around the corner. Today, nearly 1/3 of Best Buy's revenue comes from online orders, and 43% of online orders are picked up in the store itself. Inside of this store are a genius idea called stores within a store. And the insight that Jolly had was amazing. He realized that folks like Microsoft or DJI and the likes of those guys, they wanted to put their technology in front of consumers, but they couldn't afford to do stores like say Apple and other folks did. So they were perfect candidates to partner with Best Buy put stores within each one of these stores. Looking back on it, it's clear that Best Buy survived while the competitors didn't adapt for a changing world, especially one where e-commerce was so dominant. And here's the genius thing about these stores within a store. These vendors actually pay Best Buy to put those stores within a store in there. And secondarily, they often staff them with their own people. So if you go into a Best Buy on a Sunday around Black Friday and stuff like that, there might be a Microsoft employee in here. They're paying Best Buy for the privilege of having that store within a store inside. And oftentimes this means Best Buy doesn't have to buy that merchandise ahead of time like other retailers do. With the store within a store concept, well, a lot of times those technology providers are keeping possession of that stuff and Best Buy only has to pay for it when it's sold. And when you look at an Amazon or a Walmart or a Target even, good luck having one of those retailers have somebody know the difference between one TV and another. At Best Buy, you knew you could walk in and somebody would be an expert and help you pick the right thing. The company doesn't break out how much money they make from this, but they have been quoted as saying they've made between $20 and $40 million in free profit per quarter extra because of this model. So if you look at this store within a store concept, potentially that only worked because Best Buy, after everybody else went out of business, was the only game in town with scale. Given Apple, HP, Samsung, LG, and Sony comprise 57% of the revenue for Best Buy, this is huge. They leaned into the idea of the Geek Squad, which I know some people don't like so much because it's a variable quality, but it was basically this version of Apple's Genius Bar but on wheels. They would come to your house and help you make sure your printer was working, all kind of stuff. In other words, the things all of our grandmothers call us to do at their houses. These guys would do it for a fee. But this was the idea, was that they would transform Best Buy from just a retailer that had stuff on the shelves to somebody that was an active partner and a solutions provider for you as a consumer to help you pick the right stuff for you and your family. Today, Best Buy is a healthy, thriving retailer with over $47 billion in sales. And Best Buy is being super smart. They're leaning into what they're really good at. They're leading into subscription services, health tech. In fact, their My Best Buy Total service just surpassed 7 million paying subscribers. When businesses like Best Buy or any business is faced with a strategic threat, it's up to you as a business owner to figure out how you're going to respond to that. And the first place you always start with is what can we do better than anybody else can in the world? And in this case, Best Buy turned out to be the only player with a big footprint that could offer the types of services that neither Amazon, Walmart, Target, or any of those other guys could even think about doing. All right. That's it for this video. Let me know what you think in the comments below. Do you think I have it right in terms of why Best Buy is alive? And do you like Best Buy? Let me know. And, uh, I got a new hat. Hopefully you like it. Uh, let me know in the comments below. I read them all. Catch you next time. Bye.
