Best Buy 2013 Annual Report Download - page 11

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Sustained or worsening economic pressures in the U.S. and key international markets could adversely affect consumer
spending and adversely effect our revenues.
For the past several years, we have experienced the impact of difficult and uncertain macroeconomic conditions in the
geographic markets in which we operate. Certain of our products and services are viewed by some consumers to be
discretionary items rather than necessities. As a result, our results of operations are sensitive to changes in macroeconomic
conditions that impact consumer spending. Factors such as consumer confidence, employment levels, interest rates, tax rates,
availability of consumer financing, housing market conditions, and costs for items such as fuel, energy and food, can adversely
affect consumers' demand for the products and services that we offer. Our future results could be significantly adversely
impacted by these factors.
Political factors could adversely affect consumer confidence and certain aspects of our operations.
Political factors can affect consumer confidence in all of the markets in which we operate. Uncertainty regarding social or fiscal
policy, the threat or outbreak of terrorism, civil unrest or other hostilities or conflicts could lead to a decrease in consumer
confidence. Similarly, an overly anti-business climate or sentiment could lead to adverse changes in our operations or cost
structure. Other factors that may impact our operations include disruptions to the availability of content such as sporting events
or other broadcast programming. Such disruptions may influence the demand for hardware that our customers purchase to
access such content, as well as the commissions we receive from service providers. Accordingly, such disruptions could cause a
material adverse effect on our revenues and results of operations.
If we fail to attract, develop and retain qualified employees, including employees in key positions, our business and
operating results may be harmed.
Our performance is highly dependent on attracting and retaining qualified employees, including our senior management team
and other key employees. Our strategy of offering high quality services and assistance for our customers requires a highly
trained and engaged workforce. The turnover rate in the retail industry is relatively high, and there is an ongoing need to recruit
and train new store employees. Factors that affect our ability to maintain sufficient numbers of qualified employees include
employee morale, our reputation, unemployment rates, competition from other employers and our ability to offer appropriate
compensation packages. Our inability to recruit a sufficient number of qualified individuals or failure to retain key employees
in the future may impair our efficiency and effectiveness and our ability to pursue growth opportunities. In addition, we have
experienced a significant amount of turnover of senior management employees with specific knowledge relating to us, our
operations and our industry which knowledge could be difficult to replace. These management changes may negatively impact
the operation of our business.
We face strong competition from traditional store-based retailers, internet-based businesses, our vendors and other
forms of retail commerce, which directly affects our sales and margins.
The retail business is highly competitive. Price is of primary importance to customers and price transparency and comparability
continue to increase, particularly as a result of digital tools. We compete with many other local, regional, national and
international retailers, as well as certain of our vendors who offer their products directly to consumers. Some of our competitors
have greater market presence and financial resources than we do. Some internet-only businesses do not collect and remit sales
taxes in all U.S. states. In addition, because our business strategy is based on offering superior levels of customer service
utilizing a multi-channel platform, our cost structure is higher than some of our competitors. Changes in the levels of these
various competitive factors may have a significant impact on consumer demand for our products and services and the margins
we can generate from them.
Consumer demand for our products and services could decline if we fail to maintain positive brand perception and
recognition.
We operate a global portfolio of brands with a commitment to customer service and innovation. We believe that recognition and
the reputation of our brands are key to our success. The proliferation of web-based social media means that consumer feedback
and other information about our company are shared with a broad audience in a manner that is easily accessible and rapidly
disseminated. Damage to the perception or reputation of our brands could result in declines in customer loyalty, lower
employee retention and productivity, vendor relationship issues, and other factors, all of which could materially affect our
profitability.
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