Best Buy Customer Insight Group Formed For Strategic Decision-Making

Best Buy formed a customer insight unit to cull responses from store employees and help make product and strategic decisions, said Bill Hoffman, senior vice president for customer insights, Tuesday at the National Retail Federation show in New York.

Hoffman, hired in April, said he heads a 50-employee group attached to a Voice of the Customer through Employees group (VOCE) that sifts through data gathered at the store level. Store workers provide the information by logging on to the corporate intranet at the end of a shift to answer a specific question or provide “what they have seen, heard and learned” from customers, Hoffman said. Store sales staff can choose an “unsolicited information” tab to respond or provide answers to “burning questions” typically entered by management, Hoffman said.

Best Buy piloted VOCE in a store district in North Carolina and has expanded it across the chain, Hoffman said. The program is averaging 2,500 response a week and has received about 40,000 total since the program began last year, he said. Best Buy’s goal is for VOCE to have received 100,000 “insights” from store employees by year-end, Hoffman said. The effort is run by five employees, but an additional five to seven will be hired with a goal of eventually bringing the service to a local level, Hoffman said. A former store general manager in North Carolina was recently promoted to VOCE, Scott Friesen, senior director of analytics, told us.

Among changes affected by VOCE were Best Buy’s approach to selling 3D glasses and a recent decision to start a buyback program for aging CE gear, Hoffman said. The program, which began this month in stores and online, allows customers to purchase “buy-back protection” with their products. The program enables them to sell notebook, netbook and tablet PCs cellphones and TVs back to Best Buy. The protection program varies by product, but it offers up to $70 for notebooks, company officials said. Customers returning products within two months of purchase can get up to half their purchase prices in Best Buy gift cards. Notebook PCs have a maximum redemption period of two years, and for TVs it’s four years, company officials said. The buyback on products at the maximum period is 10-20 percent of the original price, company officials said.

A source of the repurchase program was VOCE, and another was Best Buy’s Reward Zone members. “Signals came from many areas and it had a great deal to do with Best Buy wanting to future-proof” customers’ purchases, Hoffman said.

The Customer Insight Unit and VOCE are in the early stages, but the group has already posted a “significantly positive” return on Best Buy’s initial investment, Hoffman said. VOCE also will likely play a major role in Best Buy’s Connected World format, Hoffman said. Best Buy launched a test of the first Connected World locations in the fall (CED Nov 17 p1). Eight stores in the Pittsburgh market and six in the Las Vegas area “grand re-opened” last weekend, company officials said. The stores were renovated to give more play to Internet-connected product.

National Retail Federation Show Notebook

Disney will install a new interactive format at all its 360 stores within six years, Paul Gainer, vice president and general manager of the North American outlets, told us. The overhaul, which comes two years after Disney bought back the stores out of bankruptcy, began with the re-opening of a Glendale, Calif., location in June and was followed by the addition of a 20,000-square-foot store in New York’s Time Square that debuted in November. The Times Square store replaced a World of Disney outlet on 57th Street. The Disney stores, which average 4,500 square feet, are being revamped to arm employees with portable check out devices -- about four per store -- and add a 300-square-foot “theater” that features a 12-foot-wide screen for showing “hundreds” of movies selected for an iPad touch-screen, said Stephen Finney, senior vice president for global retail operations. The portable devices are in 50 stores, but the timing for expanding their use to the rest of the chain hasn’t been set, Finney told us. The theater can show HD fare and will eventually add 3D movies, he said. Disney also has added “princess” mirrors that can display images when activated by RFID-equipped products like a magic wand, Disney officials said. The stores also have “trees” on which HD images, including of fireworks and Disney characters, are projected, Finney said. The stores will be linked to the Disney website, increasing the in-store inventory of 1,200 SKUs to more than 6,000, Finney said. Disney, which has 220 stores in North America, will add locations in Ontario and Vancouver, Canada, as well as Atlanta, Bellvue and Seattle, Wash., and Minneapolis, Gainer said. Remodeled stores will re-open in Chandler, Ariz., San Antonio, West Nyack, N.Y., and Puerto Rico, he said. The average purchase, which typically runs $30-$40, has increased at the remodeled stores, Finney said. In foreign markets, locations will be added in Denmark, Dublin, Ireland and Antwerp, and stores in Bromley, U.K., Liore, France and Cadiz, Naples and Las Arenas, Italy will be remodeled, company officials said. Disney’s remodeling comes two years after The Children’s Place subsidiary Hoop Retail Stores sought bankruptcy protection. The Children’s Place bought 313 mall-based stores from Disney in 2004 and signed a 15-year licensing agreement with company (CED Oct 22/04 p5). It didn’t make an up front payment to Disney, but had planned to spend $100 million upgrading and remodeling the stores. Disney itself hadn’t extensively remodeled the stores since 1996 and has spent $50 million on the redesign, Finney said. The company won’t return to the days of operating more than 500 stores, because the chain “shouldn’t be as ubiquitous as it once was,” Finney said.