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CE Pro 100

CE Pro 100: Why Best Buy is No. 1

For the second consecutive year, AudioVisions/Best Buy/Magnolia tops the CE Pro 100 list. Here's an inside look at how the company remained on top.

Many CE pros might be wondering how Best Buy’s custom revenues grew in 2012 to an estimated $731 million from $680 million in 2011, especially when all anyone ever reads about these days in the press is that the company is struggling.

Yes, Best Buy is facing serious competitive influences to its retail business. And company president had to resign in scandal, while founder Richard Schulze was making overtures to purchase the company. Despite all the bad press, according to the company’s Fiscal year 2012 annual Report, Best Buy’s total revenue grew to $50.7 billion in 2012, up about $1 billion from the previous year, growth of about 1.5 percent. and about $600 million of that growth was in the domestic U.S.

But in the world of public companies, it’s all about pleasing shareholders and keeping the stock price higher. Total profits were down, but the company still made $1.8 billion in profit last year. That’s why the company embarked on some cost-cutting moves, closing a handful of Best Buy locations and one Magnolia. The big cost savings came in staff , where the company’s slashed nearly 3,000 employees.

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Best Buy readily admits that sales fell in “several key consumer electronics product categories” and the company’s overall marketshare declined, specifically in televisions. Same-store sales of consumer electronics fell 5.4 percent year vs. year.

So how did the company’s revenues still grow? Custom integration services had a lot to do with it. Best Buy had double-digit gains in computing and mobile phones, as well as in appliances. Meanwhile, its “services” business remained steady, accounting for 6 percent of overall sales. “Services” include installation and extended warranties, although Best Buy does not break apart the two components of that category.

Last year, based on public statements by Best Buy execs in various other media, CE Pro was able to estimate that approximately 4 percent of the company’s total revenues are derived from installation services. The three-location AudioVisions division experienced double-digit increases in revenues and installations last year.

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Article Topics

News · Business Resources · Events · CE Pro 100 · All topics

About the Author

Jason Knott, Editor, CE Pro
Jason has covered low-voltage electronics as an editor since 1990. He joined EH Publishing in 2000, and before that served as publisher and editor of Security Sales, a leading magazine for the security industry. He served as chairman of the Security Industry Association’s Education Committee from 2000-2004 and sat on the board of that association from 1998-2002. He is also a former board member of the Alarm Industry Research and Educational Foundation. He is currently a member of the CEDIA Education Action Team for Electronic Systems Business. Jason graduated from the University of Southern California.

5 Comments (displayed in order by date/time)

Posted by JohnA  on  05/01  at  03:51 PM

Best buy is number 1… Guys this isn’t April 1st., it is May 1st.

The top 5-6 should not even be on the list, it is a disgrace to all the true custom integrators. You will find that you have just diminished your reputation within the community. And just because a company like ADT does “automation” doesn’t mean they should be included in the listing. I’m sorry, but I would venture a guess that Time Warner blows BB out of the water, but they both are not an true CI company.

Posted by Chad  on  05/01  at  05:35 PM

Perfect Example of how being at the top of this list has no relationship on how poorly the company is doing overall…
“services” are cleverly blended in with extended warranty sales - a known cash cow. However I don’t agree that selling a warranty is a “custom installation” and the should not get credit as such. Chrysler sells extended warranties which covers their electronics so where do they rank?....

Posted by makeitadouble  on  05/06  at  10:11 AM


Posted by makeitadouble  on  05/06  at  10:14 AM

AudioVisions increased because they cut their best employees, cut their engineering dept., cut middle waste. Some of their best sales people have left recently so time will tell.  Its all about who has the best people.

Posted by JohnA  on  05/06  at  10:53 AM

Maybe you should make one qualification be that out of your total income 80% or more must come from residential installs.

BB income from residential install sales was less then 1.5% of theirs total sales.

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