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Best Buy Primed for 'Blu' Fourth Quarter

28 Jul, 2008 By: Erik Gruenwedel

The success (or failure) of Blu-ray Disc hinges in large part on the role big box retailers such as Wal-Mart Stores Inc., Target Corp. and Best Buy Co. Inc. play selling the format to the general public.

Minneapolis, Minn.-based Best Buy arguably stocks the largest number of Blu-ray movies for sale at retail. Combined with an expansive selection of HDTVs, in-store Magnolia Home Theater and in-home Geek Squad divisions, and positive mojo among CE aficionados, the retailer continues to impress financially.

With more than 1,000 U.S. stores, Best Buy generated $9 billion in revenue during the most recent quarter, including 3.7% same-store sales increase in stores open at least 12 months. Fiscal year 2009 revenue guidance exceeds $43 billion, including a 1% to 3% comp-store sales bump.

Best Buy last week cut $20 from its house brand Insignia Blu-ray player, a move company spokesperson Brian Lucas said was done to jump-start dialogue with consumers about the merits of Blu-ray and high-definition packaged media.Home Media Magazine asked Jill Hamburger, VP of entertainment for Best Buy, to continue the discussion.

  • HM: The home entertainment industry and studios are putting a major emphasis on Blu-ray in the fourth quarter. How important is Blu-ray to Best Buy?

  • Hamburger: Blu-ray is primed to be a hot gift this holiday season. We know that customers who have invested in HD home theater systems want to watch HD content, and Blu-ray is the best way to get the most out of the movie watching experience.

    This will be the first holiday season where we can talk to customers about Blu-ray without the distraction of a format war. We can focus on showcasing the picture, sound and features of the format, which we believe customers will be blown away by.

    We also believe the lineup of movies coming out on Blu-ray this year, particularly for the holidays, will help generate a great deal of excitement. Titles such as The Dark Knight, Prince Caspian and Hellboy 2 are going to drive a lot of BD interest and will be great for showcasing the possibilities for the format. It is the content that drives the excitement, so we want to be sure customers know about the Blu-ray titles.

  • HM: Best Buy is considered the No. 1 retailer of Blu-ray movies. What are you doing to sell and promote the new format?

  • Hamburger: Our focus is on having a conversation with customers to educate them about Blu-ray and inspire them with the possibilities the format has to offer. We will do this in-store through displays that showcase Blu-ray's incredible picture and sound. We will also do it by equipping our salespeople with the information and tools they need to have a great conversation with customers about the benefits of Blu-ray. You will also see regular promotions called out on our Web site, in our circular and in stores to help people get into Blu-ray and start building their movie libraries.

    We are constantly working to improve our in-store experience and training to be sure we are doing what we can to inspire people with what Blu-ray has to offer.

    Another area that really helps us in terms of getting people excited about Blu-ray is our strength in the gaming category. [Sony PlayStation 3 game] consoles have been a great way to get a very high-quality Blu-ray player into households.

  • HM: Are you doing anything to educate consumers about what Blu-ray brings to the home entertainment experience?

  • Hamburger: Our No. 1 educational resource is our Blue Shirt sales staff. They are the best tools we have to reach out to customers, to have a good conversation with them about Blu-ray, to demonstrate the capabilities of the format, and to answer any questions people may have. So first and foremost we want to be sure our salespeople are trained and ready to help people who are interested or curious about Blu-ray.

    We will have interactive displays in our stores to let people test drive Blu-ray, in addition to educational resources online at BestBuy.com. We will also use our Magnolia Home Theater listening rooms to give demos of the format so customers can truly experience the impact of HD picture and sound.

  • HM: Is the side-by-side visual display still the best tool to promote Blu-ray?

  • Hamburger: It's one way to promote Blu-ray. We also believe sound is important in generating excitement for the format. We try to promote the format in different ways throughout our store. In the main sales floor it's mostly about the picture … showcasing the movies on large 1080p screens. In the Magnolia Home Theater areas we are better able to showcase the sound. We believe the more we can engage customers and get them to interact, look and listen to Blu-ray, the more likely they are to invest in the format.

  • HM: What do say to consumers who say they are satisfied with DVD?

  • Hamburger: DVDs continue to be a strong category for Best Buy. For many people who have smaller televisions or don't have 1080p screens, DVDs are probably the best option. But for people who have HD home theater systems and want the best movie watching experience, the difference is compelling.

    Our job is to ask customers the right questions to figure out what is best for them. If they are movie lovers and have a large HD television, we think Blu-ray is something they want to learn about. Once they get a look at the picture and hear the sound, customers are inspired by the difference.

  • HM: You sell upconverting DVD players. Don't they undercut the argument to buy Blu-ray?

  • Hamburger: Not really. Upconverting DVD players are an inexpensive option for people looking to maximize the picture quality of their existing DVDs. If you don't have a 1080p screen or if you have a smaller television, upconverting DVDs is a great option. Blu-ray offers both upconversion and true HD. For people looking to get the most out of their home theaters, it's the best option and with prices coming down it's becoming even more attractive to mainstream customers.

    There is a place for both types of players in the house.

  • HM: Is Best Buy pursuing a streaming or download strategy?

  • Hamburger: We are not able to comment on any tests or future plans in this area other than to say we are always looking at options to meet customers' needs.

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