Best Buy 2002 Annual Report Download - page 10

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We believe that we can modestly improve our
operating margins as we increase sales of
digital products and leverage our expenses
over our national franchise. Finally, we are
preparing to re-engineer our appliance busi-
ness, including enhancements to the customer
experience, which we expect to boost sales
and profitability in the next two years.
Expanding our Services
Another major opportunity for us is developing
deeper relationships with customers through
growth in the services we offer to our customers.
Whether we are installing a digital television,
connecting a car DVD player, configuring a
computer or delivering appliances, we already
are known for offering services. We have
invested in this business for the past three
years in order to improve customer satisfaction.
We have begun to offer new types of services
as well. For example, we are the top retailer
of subscriptions to MSN, Microsoft’s Internet
service provider. We have seen early success
with other subscription-based models, such
as satellite radio. In the future, as consumers
begin to embrace new delivery models for
entertainment and information, and as the
networked home arrives, we want our
customers to think of Best Buy.
Services, like accessories, are an integral part
of the package of products and services we
provide to customers. Together they provide an
excellent avenue for leveraging our greatest
asset: the customer relationships we have
created through our stores.
Anticipating Challenges
In the fast-paced world of retailing, only those
who anticipate and respond to challenges in
the environment succeed. For example,
in anticipation of continued price pressures
and competition from mass merchandisers, we
have expanded our assortment and invested
in added employee training to support sales
of complex digital products and services.
We also are partnering with key stakeholders
in the entertainment business to explore a
competitive alternative for consumers who
download entertainment software. In addition,
we are partnering with our vendors to
increase our mutual profitability so that they
can invest in the development of tomorrow’s
products and services.
With an experienced management team,
a culture that embraces change and the
desire to lead through innovation, we have
much reason for optimism about the future
of Best Buy.
8Business Review: Best Buy