The Rise, Fall, and Comeback of Best Buy (How It Outsmarted Amazon)

The electronics chain that was losing $1.7 billion and looked doomed — saved by a French hospitality exec with zero retail experience.

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By The Numbers

$47B

annual revenue today

$1.7B

loss in Q1 2012

paid subscription members

What They Nailed Early

Built the first superstore model for electronics with high volume over high margins. Customers loved selection over pushy salespeople. By 2000, they surpassed Circuit City in sales and became the dominant electronics retailer in America.

What Changed

Amazon's showrooming gutted sales — customers browsed in-store then bought online cheaper. Customer service collapsed, the CEO resigned over scandal, and the stock crashed to $11. Then new CEO Hubert Joly arrived with no retail experience and made audacious moves: price-matched Amazon, slashed $2B in costs without touching the showroom floor, and turned stores into assets through omnichannel and store-within-a-store partnerships.

Where it Landed

Thriving with $47B in sales. One-third of revenue comes from online, 43% picked up in-store. 7 million paying subscribers. The last electronics chain standing while Circuit City, Fry's, and Radio Shack all died.

The Principles

Face reality fast. Joly didn't deny showrooming existed — he price-matched Amazon immediately and turned the threat into a reason to visit stores.

Cut costs everywhere except the customer experience. $2B in cuts (jets, color printing, non-labor) but never touched showroom floor staffing or training.

Turn liabilities into assets. 70% of Americans live within 15 minutes of Best Buy — vendors now pay to access that footprint through store-within-a-store deals.

Builder's Takeaway

If you're fighting an existential threat, remember:

•

Match the competitor's strength, then win on what they can't do (omnichannel, expertise, immediacy)

•

Cut ruthlessly everywhere except the customer-facing experience — that's your only moat

•

Monetize your distribution advantage — vendors will pay for access to your customers

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