PYMNTS Intelligence Alternate Banner June 2024

Best Buy: Shoppers Are Shifting Their Spending Toward Seasonal Sales

Best Buy store

As consumers prove more cautious about their discretionary retail spending, Best Buy is seeing shoppers hold off until sales events to make big purchases.

On a call with analysts Thursday (May 30) discussing the retailer’s first-quarter fiscal 2025 earnings results, the consumer electronics retailer noted that shoppers are adjusting their purchasing behavior in response to ongoing financial pressures.

“Customers remained very deal-focused and attracted to more predictable sales moments,” CEO Corie Barry said.

Barry highlighted a heightened focus on deals and promotions, noting that the major appliances category has become increasingly promotional. The company has observed that consumers are not only looking for discounts but also specifically seeking them out at times when they have come to expect retailers to offer them, such as Memorial Day and back-to-school periods.

Shoppers are changing their behaviors in response to budgetary pressures. The February/March edition of the PYMNTS Intelligence “New Reality Check: The Paycheck-to-Paycheck Report” revealed that 60% of consumers have reduced their spending on nonessential items in response to inflation, and half have turned to cheaper merchants.

Additionally, 45% of low-income consumers (earning under $50,000 per year), 41% of middle-income consumers (earning $50,000 to $100,000 a year), and 28% of high-income consumers (earning over $100,000 annually) reported that they had opted for lower-quality products to reduce expenses for the same reason.

Like Target, Best Buy is also seeing consumers prioritize non-retail categories in their discretionary spending, which is shrinking their budgets for buying nice-to-have products.

“Consumers continue to make tough choices with their budgets, trading down in some areas, while still prioritizing spend in others, like services and experiences like travel,” Barry said.

The retailer is also seeing ongoing adoption of its Click-and-Mortar™ offerings, those that bridge the digital and physical. Barry noted that 40% of digital sales are picked up in stores, with consumers demanding quick fulfillment. More than 90% of these orders were ready within 30 minutes. This swift and flexible fulfillment capability caters to the modern consumer’s demand for convenience and speed. The shift underscores the growing importance of integrating physical and digital retail experiences to meet customer expectations.

According to the PYMNTS Intelligence study “2024 Global Digital Shopping Index: U.S. Edition,” conducted in collaboration with Visa Acceptance Solutions and based on a survey of over 2,400 U.S. consumers, 3 in 10 shoppers prefer Click-and-Mortar™ channels. The study found that 19% of consumers look for digital assistance while shopping in stores, and 11% favor placing online orders for in-store pickup.

Additionally, personalization has become a critical component of Best Buy’s strategy to enhance customer experience and drive engagement.

“We are focused on providing increasingly personalized, highly relevant and motivational content, as we can attribute roughly 90% of our annual revenue to known customers,” Barry said during the call.

The company’s app now features a personalized home screen powered by artificial intelligence, tailored to individual preferences and shopping behaviors. The initiative has resulted in higher engagement rates, demonstrating the importance of personalized experiences in retaining and attracting customers, she said.

Consumers want personalization. The PYMNTS Intelligence report “Personalized Offers Are Powerful — but Too Often Off-Base,” which drew from a survey of over 2,500 U.S. consumers, revealed that 83% of shoppers are interested in receiving personalized offers.

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