Visa Acceptance Enhancements Connect AI to Click-and-Mortar™ Shopper

Best Buy Rethinks Its Stores for the Click-and-Mortar™ Shopper

With the emergence of omnichannel shopping reshaping consumers’ expectations of brick-and-mortar stores, Best Buy is reconceptualizing its physical spaces.

On a call with analysts Thursday (Feb. 29) discussing the consumer electronics retail giant’s fourth-quarter fiscal 2024 earnings results, CEO Corie Barry explained that with consumers no longer solely dependent on stores to become familiar with a given location’s inventory, the company can become more deliberate about how it showcases products in its physical spaces.

“We plan to touch every single store in the chain in some fashion, improving both our merchandising and ease of shopping for customers,” Barry said. “This includes 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.”

For Best Buy, 38% of sales occur via digital channels, a share that has stayed flat relative to last year.

The Click-and-Mortar™ Shopper

PYMNTS Intelligence’s study “2024 Global Digital Shopping Index: The Rise of the Click-and-Mortar™ Shopper and What It Means for Merchants,” commissioned by Visa Acceptance Solutions, drew from a survey of nearly 14,000 consumers across seven countries to understand trends in consumer shopping behavior. The results revealed that 39% of consumers are now Click-and-Mortar shoppers™, engaging across digital and physical channels.

Specifically, 25% are digitally assisted in-store shoppers, using technology to improve their brick-and-mortar experience, and 14% are pickup shoppers, preferring to buy online and collect their items at the store. Best Buy, for its part, is focused on meeting the needs of these pickup customers.

“Forty-four percent of what we sell online is still picked up in a store,” Barry said. “…For our model in particular, there is this really important interplay between … the convenience and the ability to ubiquitously search online, but also go into the store if I would like to, regardless of where I choose to make the purchase. Which is why we are moving at a methodical pace, I would say, in terms of the evolution of our store footprint.”

As the company looks to drive up Click-and-Mortar™ engagement, Best Buy has been “very focused” on getting consumers to use its app, Barry explained, noting that on Black Friday, its mobile platform was ranked the No. 3 shopping app and No. 4 app overall on Apple’s App Store.

Additionally, its My Best Buy Plus and My Best Buy Total paid memberships had 7 million members at the end of the quarter, up from 6.6 million the previous quarter.

“Paid members consistently showed higher levels of interaction with comparatively higher levels of spend at Best Buy and a shift of spend away from competitors,” Barry noted.

Taking a Hit

Overall, however, the retailer’s sales dipped, with comparable sales dropping 4.8% year over year.

“There have been and continue to be macro pressures impacting retail overall and [consumer electronics] more specifically,” Barry said. “First, inflation has been slowing, but prices for the basics like food and lodging are still much higher, and consumers have to prioritize and make trade-off spend decisions.”

The 2023 PYMNTS Intelligence study “Consumer Inflation Sentiment Report: Consumers Cut Back by Trading Down,” which drew from a survey of more than 2,000 U.S. consumers, found that 69% have reduced nonessential spending on retail products because of high inflation.

Plus, another 2023 PYMNTS Intelligence study, “New Reality Check: The Paycheck-to-Paycheck Report: The Economic Outlook and Sentiment Edition,” found that about half of consumers did not expect to purchase expensive electronics or appliances during the year amid ongoing financial challenges.

Moreover, Barry noted that when consumers do splurge amid budgetary pressures, they tend to do so on experiences such as “concerts and vacations” rather than products. She also said the “relatively stagnant housing market” has taken a hit on consumer electronics purchases. Plus, the company is still seeing some normalization after the rise in demand in the early stages of the pandemic.

PYMNTS Intelligence confirmed that many consumers splurge on experiences. The Nonessential Spending Deep Dive Edition of the New Reality Check study found that 34% of consumers said their spending on food from a table-service restaurant in the previous month was indulgent, and 31% said the same about airfare.

Best Buy’s concerted effort to enhance its physical shopping experiences for the digital customer highlights the growing need to cater to the expectations of Click-and-Mortar™ shoppers, as macroeconomic pressures and changing consumer spending patterns pose ongoing challenges for the retailer.

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.