The Showroom That Refused to Die
On a subfreezing Thanksgiving evening in 2014, forty Best Buy executives fanned out across the Twin Cities in parkas and company fleeces to visit their own stores and spy on competitors, breath crystallizing under parking-lot sodium lights, clipboards in hand. The temperature had plunged to one of the coldest Turkey Days in Minneapolis history. Some 40 million loyalty-program members and a $40 billion revenue base hung in the balance — and nobody in the C-suite had eaten more than a slice of pizza. Around 4 a.m. on Black Friday, CEO Hubert Joly was jolted awake by a call from Mary Lou Kelley, his head of e-commerce: the website had cratered under an unexpected traffic surge. For a company that had spent the prior two years executing a turnaround strategy widely assumed to be a long-shot, the crash seemed like a cruel punchline.
But by the time the data rolled in state by state — like campaign workers watching election returns, as the team later described it — the mood lifted. Comparable-store sales rose for the first time in four years, up 2.5%, even as the overall consumer-electronics industry posted declines. Fourth-quarter profits jumped 77%. The stock, which had traded below $12 in late 2012, was now north of $35.
This was the inflection point that separated Best Buy's obituary from its resurrection narrative. Two years earlier, Forbes had run a headline that became retail legend: Why Best Buy Is Going Out of Business. The company had reported a $1.7 billion loss. Its CEO had resigned over an inappropriate relationship with a subordinate. Its founder, Richard Schulze, was circling with an opaque go-private bid. Amazon was not merely competing with Best Buy — it was using the chain's stores as a free showroom, a phenomenon so widespread that the neologism "showrooming" entered the business lexicon as a synonym for retail doom.
That Best Buy survived at all is surprising. That it thrives today — $43.5 billion in fiscal 2025 revenue, more than 1,000 stores, the last national specialty electronics chain standing — requires an explanation more nuanced than any turnaround cliché can provide. The company didn't merely cut costs or embrace e-commerce. It renegotiated its very reason for existing in an economy where price transparency had collapsed the information advantage that big-box retail was built on, then discovered that the thing Amazon couldn't replicate — the human being standing in the store who actually understood what you needed — was not a legacy cost but a strategic asset.
By the Numbers
Best Buy at a Glance
$43.5BFY2025 revenue (ended Feb 2025)
~1,000U.S. and Canada stores
85,000+Employees
~$17BMarket capitalization (mid-2025)
No. 72Fortune 500 ranking (2015)
$1B+Annual costs excised during Renew Blue
~40MActive loyalty program members (2012)
A Tornado, a Stereo, and the Birth of a Category Killer
Richard Schulze grew up in St. Paul, the son of a Midwestern working-class family with no particular affinity for electronics. What Schulze possessed was a salesman's instinct sharpened by early failure — he'd dropped out of a brief stint at an electronics distributorship, then opened his own audio store in 1966, a 4,000-square-foot shop called Sound of Music that sold hi-fi stereos and car speakers to teenagers in the suburbs of Minneapolis. He was twenty-three. The name was aspirational and slightly corny, a relic of the decade's optimism.
Sound of Music was a niche operation for the better part of two decades — a small chain of audio stores clustered in Minnesota, profitable but unremarkable, generating about $9 million in annual revenue by the early 1980s. What changed everything was, improbably, a tornado. In 1981, a twister tore through the Roseville, Minnesota store — the chain's most profitable location. The building was damaged but the inventory survived. Schulze staged a massive "Tornado Sale" in the parking lot, advertising heavily and slashing prices on the remaining stock. The blowout generated more revenue in a few days than the store typically earned in a month.
Schulze recognized something in the frenzy that most retailers would have missed. The customers who swarmed the lot weren't audiophiles or hi-fi enthusiasts — they were ordinary people attracted by the spectacle, the pricing, the sheer volume of product. The lesson: the future wasn't in specialized audio for connoisseurs. It was in everything electronic, sold to everyone, in massive stores with huge selection and conspicuous low prices. This was the superstore concept before "category killer" was a term of art. Schulze recapitulated the tornado in permanent form.
In 1983, he renamed the chain Best Buy and opened the first superstore format — 40,000-plus square feet of computers, TVs, VCRs, and appliances arranged in a warehouse-like layout with bright signage and aggressively advertised prices. The name itself was a positioning statement: not "Sound of Music" with its connoisseur connotations, but "Best Buy," a promise of value distilled into two syllables that any consumer could parse. The stores abandoned the old commissioned-sales model in favor of a non-commissioned, self-service format. This was radical. Circuit City, Best Buy's primary competitor, relied on commissioned salespeople to upsell customers; the commission structure was, in fact, a significant profit center. Schulze's bet was that eliminating commissions would draw more traffic, generate higher volume, and build trust.
He was right. Best Buy went public in 1985 and began expanding aggressively across the Midwest, then nationally. Revenue exploded from roughly $29 million in 1983 to over $500 million by 1990, then to $7.7 billion by fiscal 1997. The formula was straightforward but brutally effective: massive stores, branded merchandise at competitive prices, high inventory turns, and a culture that rewarded volume over margin. It was a flywheel before anyone used the word: more stores attracted more vendor support, which funded more advertising, which drove more traffic, which enabled better pricing, which attracted more customers. Rinse and repeat across every new metro area.
The great news is that Best Buy has amazing strengths on which to build. We are the leader in a growing and fragmented market and our market share has been stable or growing in most product categories.
The Graveyard of Consumer Electronics Retail
To understand Best Buy's improbability, you must understand the body count. Consumer electronics retail in the United States is a killing field. The list of deceased chains reads like a memorial wall: Circuit City, CompUSA, RadioShack, Tweeter, The Good Guys!, Rex Stores, Ultimate Electronics, hhgregg. Each had its moment of dominance. Each died.
Circuit City's demise is the most instructive comparison. Founded in 1949 in Richmond, Virginia, Circuit City was the prototype category killer — the company that invented the superstore format for electronics before Best Buy refined it. At its peak in the early 2000s, Circuit City operated more than 700 stores and generated over $12 billion in annual revenue. It filed for bankruptcy in November 2008 and liquidated entirely by March 2009. The proximate cause was the financial crisis, but the underlying pathology was strategic sclerosis: Circuit City clung to its commissioned-sales model too long, expanded into real estate that bled cash, and fatally miscalculated by firing 3,400 of its highest-paid — and most experienced — sales associates in 2007 to cut costs, hollowing out the knowledge advantage that justified its existence. The customers noticed immediately. They went to Best Buy.
RadioShack's collapse was slower and more poignant — a brand that had survived eight decades by evolving from ham radio equipment to personal computers to cell phones, only to discover in the 2010s that it had no remaining reason to exist. Its stores were too small for the superstore era, its product mix too narrow, its cost structure too heavy for the volume it generated. It filed for bankruptcy in 2015, filed again in 2017, and exists today as a faintly zombified e-commerce brand.
CompUSA, Tweeter, The Good Guys! — each was felled by some combination of the same forces: Walmart's entry into consumer electronics (crushing margins industrywide), Amazon's relentless price transparency, the secular decline in certain product categories (CDs, DVDs, packaged software), and the peculiar macroeconomics of an industry where the average selling price of the core product — the television — has declined relentlessly for three decades even as performance improved exponentially.
Best Buy survived all of this. Not easily. Not without scars. But it survived.
The Showrooming Crisis and the Man from McKinsey
By 2012, the forces that had killed Circuit City and RadioShack were converging on Best Buy with compound velocity. The "showrooming" phenomenon — customers browsing in Best Buy's stores, comparing prices on their smartphones, and purchasing from Amazon — had become so pervasive that Amazon launched a Price Check app in late 2011 that offered users a $5 discount for scanning items in physical stores and buying them online instead. This was not subtle competitive behavior. It was an explicit declaration that Best Buy's stores existed primarily to serve Amazon's sales funnel.
The financial results reflected the siege. In fiscal year 2013 (ended February 2013), Best Buy reported a net loss of $441 million. The prior year had been worse: a $1.7 billion loss, driven by impairment charges and write-downs on international operations that had consumed capital without generating returns. The stock price had collapsed from a 2006 peak above $55 to a nadir below $12 in late 2012. Fitch and S&P slashed the company's bond ratings to junk. Forbes published the article that became the company's unofficial epitaph.
Into this walked Hubert Joly — a Frenchman, a former McKinsey partner, a former CEO of Carlson Companies (the parent of Radisson hotels and the Carlson Wagonlit travel-management business). Joly had no retail experience. He had never worked in consumer electronics. He had never managed a company with 1,400 stores and 140,000 employees. The board's decision to hire him was itself a signal of desperation, or possibly clarity: the consumer-electronics retail playbook was exhausted. Perhaps someone who hadn't internalized its assumptions could see what insiders could not.
Joly arrived in September 2012 and did something that seemed almost theatrically humble: he spent his first week working in a Best Buy store in Coon Rapids, Minnesota, wearing the Blue Shirt, helping customers, shadowing employees. It was a diagnostic exercise disguised as a PR gesture. What Joly learned on the floor crystallized a set of convictions that would drive the next eight years: the employees were passionate and knowledgeable, but demoralized; the stores were messy but fixable; the customer experience was inconsistent but not irredeemable; and the existential threat from Amazon, while real, was overstated — because Amazon could not replicate the experience of a human being who understood your home theater system, your family's computing needs, your smart-home wiring.
Two months later, in November 2012, Joly unveiled a strategy he called "Renew Blue" at a New York analyst and investor day. The plan had five pillars: reinvigorate the customer experience, invest in and engage employees, work with vendor partners to create differentiated experiences, increase return on invested capital, and continue leadership in key product categories. The plan did not contain the word "retrenchment." It did not propose closing hundreds of stores. It did not suggest that Best Buy should become an online-only business. This was, in itself, a radical proposition in an era when the conventional wisdom held that physical retail was a structural liability.
I am so incredibly proud of our teams' execution – they seamlessly implemented a new and highly effective operating model in a matter of 48 hours across our entire store base.
The Co-Pilot and the Billion-Dollar Scalpel
If Joly was the visionary, Sharon McCollam was the surgeon. Joly recruited her out of retirement in December 2012 to serve as chief financial officer — a move that would prove as consequential as any strategic pivot. McCollam was a Williams-Sonoma veteran with a reputation for operational rigor bordering on the fanatical; she was the kind of executive who inspected stores with white gloves to check for dust. Literally.
McCollam's mandate was simple in concept and punishing in execution: cut $1 billion in annual costs without gutting the customer experience. She overhauled the IT infrastructure, restructured the supply chain, renegotiated vendor contracts, and imposed budgetary discipline on a corporate culture that had grown complacent during the growth years. The $1 billion target was met. Then exceeded.
But the cost cuts were table stakes — the price of admission to survival, not the source of competitive advantage. The genuinely transformative moves were subtler and more counterintuitive. Three deserve particular attention:
Price matching. In early 2013, Best Buy implemented a comprehensive price-matching policy against major online retailers, including Amazon. The logic was deceptively simple: if the principal reason customers showroomed was price, then eliminate the price differential. The margin impact was real but manageable — far less catastrophic than the revenue lost to customers walking out the door. The psychological impact was enormous: it neutralized the showrooming threat at its root and gave customers permission to buy in the store.
Store-within-a-store. Joly and his team struck deals with Samsung, Microsoft, Apple, Sony, and other major brands to create dedicated branded experiences inside Best Buy stores — essentially, mini-showrooms funded by the vendors themselves. Samsung paid to build and staff Samsung Experience Shops. Microsoft funded Windows Stores. The genius of this arrangement was that it aligned incentives: vendors got premium retail real estate and direct consumer access that they couldn't build themselves at scale, while Best Buy got capital investment in store renovation, vendor-funded labor, and product differentiation — all without spending its own cash. The stores became, in effect, a platform, and the vendors became paying tenants.
Turning the showroom liability into a distribution asset. Best Buy's 1,000-plus stores represented an enormous sunk cost — but also, from the right angle, an enormous logistics advantage. The company began using its stores as fulfillment centers for online orders, offering ship-from-store and same-day pickup capabilities that Amazon, for all its distribution prowess, could not match in every metro area. The stores became nodes in an omnichannel network — a word that Joly's team used so often it became a kind of mantra. By the mid-2010s, approximately 50% of Best Buy's online orders were being fulfilled from stores.
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Renew Blue: Key Milestones
The turnaround in sequence
Sep 2012Hubert Joly begins as CEO; spends first week working in a Coon Rapids, MN store
Nov 2012Joly unveils Renew Blue strategy at NYC analyst day
Dec 2012Sharon McCollam recruited as CFO from retirement
Early 2013Comprehensive price-matching policy launched vs. Amazon
2013-2014Store-within-a-store partnerships with Samsung, Microsoft, Apple, Sony
Q4 FY2015Comparable-store sales rise for first time in four years (+2.5%)
2015$1 billion in annual cost reductions achieved
Jun 2019
The Vendor as Customer
The store-within-a-store model deserves its own reckoning, because it represents a strategic inversion that most analysts underappreciated at the time and many still do. Traditional retail operates on a merchant model: the retailer buys product at wholesale, marks it up, and sells it to consumers. The retailer's leverage comes from its control of shelf space and foot traffic. The vendor's leverage comes from brand and product desirability. It is an inherently adversarial negotiation.
What Joly's Best Buy proposed was something different. Instead of treating vendors purely as suppliers, Best Buy repositioned itself as a platform — a physical space where technology brands could access consumers in ways they could not replicate independently. Apple had its own stores, sure, but Apple Stores numbered around 270 in the U.S. Best Buy had over 1,000. Samsung had no retail stores in America. Neither did LG, or Sony, or Bose, or most other consumer-electronics brands. Best Buy was, for these companies, the only scaled physical retail channel remaining in the United States. And as the competitor set shrank — Circuit City gone, RadioShack gone, Sears exiting electronics — Best Buy's monopoly on physical distribution only strengthened.
The economics of this position are remarkable. When Samsung spends millions to build and staff a branded showcase inside a Best Buy, that capital expenditure flows to Best Buy's benefit without appearing on Best Buy's balance sheet. The vendor funds the renovation. The vendor often funds supplemental labor — "vendor-funded" employees who wear Samsung or Microsoft logos but operate inside Best Buy's stores. Best Buy provides the real estate, the foot traffic, and the customer relationship. The vendor provides the capital and the brand experience. This is not retail in the traditional sense. It is closer to a media-company model — selling access to an audience — or a real-estate model, leasing premium space to brands willing to pay for proximity to consumers.
The transformation of Best Buy from a traditional merchant into something resembling a platform company — part retailer, part showroom landlord, part services provider — is the thread that connects every strategic move from 2013 onward. It explains the Geek Squad investment, the Total Tech membership program, the in-home advisor initiative, and the growing emphasis on services revenue. Best Buy was not merely surviving Amazon. It was becoming something that Amazon could not easily replicate: a physical node in the technology ecosystem where humans interact with products, receive advice, get installation and repair services, and develop ongoing relationships that generate recurring revenue.
The Blue Shirt as Moat
The most underrated element of the Best Buy turnaround is the one Joly talks about most: people. In his telling — and it is a telling he has refined over hundreds of speeches, an HBR article, and his book
The Heart of Business — the competitive advantage of Best Buy is irreducibly human. The Blue Shirt associate who can explain the difference between OLED and QLED, who understands which mesh Wi-Fi router works best in a split-level home, who can help a sixty-five-year-old set up a new laptop — this person is the product. Not the TV. Not the laptop. The knowledge.
This sounds like corporate boilerplate. It is not. Or rather, at Best Buy it was not, because Joly actually invested in it. He raised wages. He invested in training. He created programs that gave employees real career paths. He pushed decision-making authority down to the store level — the robot-dinosaur story (Blue Shirt associates improvising to replace a broken toy dinosaur for a distraught child) became a parable for the kind of frontline empowerment Joly championed. He inherited a demoralized workforce whose hours had been cut, whose raises had been frozen, and whose daily experience was watching customers use their phones to buy from Amazon. He had to convince these people that they mattered. That they were not a legacy cost to be optimized away, but the core of the value proposition.
The challenge of this approach is that it scales poorly and costs dearly. Every time Best Buy invests in training a Blue Shirt, it risks losing that employee to a competitor (or to Amazon's warehouses, which pay competitively without requiring product expertise). Every wage increase compresses margins in a business where margins are already razor-thin. The turnover rate in retail is brutal — typically exceeding 60% annually in the industry — and electronics retail, with its required technical knowledge, suffers more from turnover than most sectors. Joly's bet was that investing in people would reduce turnover, improve the customer experience, drive repeat visits, and ultimately pay for itself in higher comparable-store sales.
The evidence suggests he was right, at least directionally. During the Renew Blue period (2012–2019), Best Buy's stock roughly quintupled. Comparable-store sales returned to growth and stayed positive for most of that period. The company went from being a junk-rated credit to a healthy balance sheet. But the causal chain is difficult to prove with precision — did comp sales improve because of better employees, or better pricing, or store-within-a-store, or the broader recovery in the housing and technology replacement cycle? Almost certainly all of the above. What is clear is that the people strategy created a feedback loop: better associates attracted better vendor partnerships (because Samsung and Apple wanted their products presented by knowledgeable humans), which attracted more foot traffic, which justified the wage investment.
Corie Barry and the Pandemic Stress Test
Joly stepped down as CEO in June 2019, elevating Corie Barry — a Best Buy lifer who had risen through finance and strategy, becoming CFO before her appointment to the top job at age 43. Barry was the anti-Joly in some respects: where Joly was a cosmopolitan outsider who had diagnosed the patient with fresh eyes, Barry was an insider who knew every organ of the body. She had joined Best Buy in 1999, spent two decades in progressively senior roles, and understood the company's culture, its supply chain, its vendor relationships, and its financial mechanics at a granular level.
Barry barely had time to establish her own strategic agenda before the pandemic arrived. In March 2020, Best Buy shifted its entire store fleet to curbside-only service in 48 hours — a logistical feat that Barry would later describe with evident pride. The company retained approximately 70% of its sales during the curbside-only period, a number that astonished analysts. Domestic online sales surged over 250%, with roughly half of those orders fulfilled via store pickup. The omnichannel infrastructure that Joly had built as a competitive weapon against Amazon turned out to be a pandemic survival mechanism.
The human cost was real. Best Buy furloughed approximately 51,000 domestic hourly store employees beginning April 19, 2020 — nearly all part-time workers. Barry and the board took symbolic pay cuts (she forfeited 50% of her base salary through September 2020), and furloughed employees retained health benefits at no cost for at least three months. But the furloughs underscored a tension at the heart of the people-first philosophy: in a crisis, labor is the most elastic cost, and even a company that claims to value its employees above all else must, when survival is at stake, send 51,000 of them home.
The fiscal year that ended January 2021 — the first full pandemic year — produced extraordinary results: revenue surged to approximately $47 billion, driven by a once-in-a-generation demand spike as Americans outfitted home offices, upgraded entertainment systems, and bought laptops for remote schooling. The pandemic proved Best Buy's essentiality in the most literal sense: people needed technology to function, and they needed a trusted retailer to help them get it.
The hangover was correspondingly severe. As stimulus spending faded and the replacement cycle decelerated, revenue declined to approximately $46.3 billion in fiscal 2023 and then to $43.5 billion in fiscal 2025. The industry-wide demand pull-forward created a trough that Best Buy is still navigating. Barry has managed through it with disciplined cost control, continued investment in services, and a strategic patience that reflects her financial DNA.
The Tariff Frontier and the Wealth Gap
As of mid-2025, Best Buy faces a macroeconomic landscape that would have been unimaginable even three years ago. The Trump administration's tariff regime — sweeping duties on Chinese imports that dominate the consumer-electronics supply chain — strikes Best Buy with particular force. Less than 10% of the world's electronics are manufactured in the United States. At the beginning of 2025, approximately 55% of the goods Best Buy sold came from China; by mid-2025, that figure had dropped to roughly 35%, with Mexico and domestic production absorbing some share. But the reordering of global supply chains is neither costless nor quick.
Barry has spoken candidly about the structural challenge. At the Fortune Most Powerful Women Summit in October 2025, she articulated a concern that goes beyond tariffs to the fundamental shape of the consumer economy: the growing gap between affluent and lower-income spending power. Approximately 60% of
GDP, Barry noted, now depends on spending by the most affluent segment of U.S. society — double the pre-pandemic share. "Anytime the entire economy is heavily reliant on a small, narrow population of people, that is not good for the long-term health of the economy," she said.
For Best Buy, which must "appeal to a very wide swath of society" — her phrase — this bifurcation is existential in a different way than Amazon was. Amazon threatened Best Buy's relevance. The wealth gap threatens its addressable market. If lower-income consumers can't afford a new laptop or a $600 phone, no amount of store-within-a-store magic or Blue Shirt expertise can generate the transaction. Barry's response has been to broaden the assortment toward more affordable price points — ensuring, as she put it, that "the answer isn't, 'No, I can't afford anything.'" But in a high-tariff, high-inequality environment, the tension between value positioning and margin preservation will define Best Buy's next strategic era.
Anytime the entire economy is heavily reliant on a small, narrow population of people, that is not good for the long-term health of the economy.
The Graveyard's Last Headstone — or the Cathedral's Foundation
Stand in a Best Buy store in 2025 and you are standing in an archaeological site. The layers accumulate: Schulze's tornado-sale insight (volume over specialization), the superstore format that crushed Circuit City, the employee-empowerment culture that Joly injected, the store-within-a-store architecture that turned vendors into paying tenants, the omnichannel logistics that made stores into fulfillment nodes, the Geek Squad services that generate recurring revenue, the Total Tech membership that binds customers into annual relationships.
Each layer was a response to a different threat. Each transformed the company into something slightly different from what it had been. The Sound of Music was a hi-fi shop. Best Buy 1.0 was a category-killing superstore. Best Buy 2.0, post-Renew Blue, was something harder to name — part retailer, part platform, part technology-services company, part showroom-as-a-service provider. The company's survival is not a single insight but an accumulation of reinventions, each arriving just barely in time, each preserving something essential from the previous era while shedding something that had become lethal.
The question that hangs over the company now is whether the current configuration can survive the next wave — tariff-driven cost inflation, the wealth gap, the continued migration of spending online, the maturation of the smartphone replacement cycle, the possibility that AI-powered shopping assistants could eventually replicate the Blue Shirt's expertise digitally. Best Buy has outlived every competitor in its category. The graveyard is full. The question is whether Best Buy is the last headstone waiting to be inscribed, or the cathedral built on the bones.
Circuit City's liquidation auction, in the winter of 2009, sold off fixtures and inventory from 567 stores simultaneously. Among the assets acquired by various buyers: display cases, shelving units, and the neon signs that had once glowed over strip-mall entrances from coast to coast. Best Buy's Richfield, Minnesota headquarters is fifteen miles from where Circuit City's last Minnesota store went dark.
