← Back to all One Page Business Stories
|
Free resources & newsletter

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

The electronics chain that was losing $1.7 billion and trading at $11 a share — saved by a French hospitality exec with zero retail experience.
Watch this on YouTube

By The Numbers

$47B
annual revenue today
$1.7B
quarterly loss at crisis
7M
subscription service members

What They Nailed Early

Built the first superstore format for electronics with massive selection over pushy salespeople. High volume, lower margins crushed competitors. By 2000, surpassed Circuit City in sales and became the dominant player.

What Changed

Amazon's showrooming gutted sales as customers browsed in-store then bought online cheaper. Customer service collapsed, CEO resigned over scandal, and Q1 2012 posted $1.7B loss. Stock crashed to $11. Then CEO Hubert Joly arrived with no retail experience and faced reality: he price-matched Amazon, slashed $2B in costs without touching showroom quality, and turned stores into assets through omnichannel and stores-within-stores.

Where it Landed

Thriving with $47B in sales. One-third of revenue from online, 43% picked up in-store. Store-within-store deals with Microsoft, Samsung, and others generate $20-40M per quarter in pure profit. 7 million subscription members.

The Principles

1. 
Face reality fast. Joly price-matched Amazon immediately instead of pretending showrooming wasn't real — even though it crushed margins short-term.
2. 
Cut costs everywhere except customer experience. Best Buy slashed $2B in expenses (even color printing) but never touched showroom floor quality or staffing.
3. 
Turn liabilities into assets. 70% of Americans live within 15 minutes of Best Buy — Joly weaponized that through omnichannel and vendor partnerships no pure e-tailer could match.

Builder's Takeaway

If you're facing an existential threat, remember:
• 
Match the competitor's strength immediately, then find what they can't replicate
• 
Protect customer-facing quality while cutting everything behind the scenes ruthlessly
• 
Monetize your physical footprint — stores can be distribution, showroom, and vendor real estate
Want the whole story? → Watch this on YouTube