Best Buy Renew Blue (2012-2017): how Hubert Joly's price-matching plus services strategy beat Amazon at showrooming

The 2011-2012 existential crisis

By 2011-2012 Best Buy faced an existential question. Amazon.com was growing rapidly in consumer electronics, with structural cost advantages (no physical-store overhead, lower-cost distribution). Best Buy's 1,000+ US store footprint had become a liability rather than an asset — consumers visited Best Buy to inspect products in person (touch screens, see TVs in operation, ask sales staff questions) and then bought from Amazon for 10-30 percent less. The pattern was called “showrooming” and was widely viewed as terminal for big-box electronics retail. Circuit City had liquidated in 2009. RadioShack would file for Chapter 11 in 2015. Best Buy's stock had declined substantially through 2011-2012. The question was whether Best Buy would follow.

In April 2012 Best Buy CEO Brian Dunn resigned amid an internal investigation. In August 2012 the Best Buy board chose Hubert Joly, the French-born CEO of hospitality company Carlson, to lead the company. Joly was an unusual choice — he had no electronics-retail background. The board's argument was that Joly's turnaround experience at Carlson (taking the company through post-2008-recession reorganisation) and at Vivendi Universal Games (where he had led a turnaround in the early 2000s) was more important than category-specific expertise.

The November 2012 Renew Blue plan

On November 13, 2012, Joly held his first investor meeting as CEO and announced Renew Blue, a five-priority turnaround strategy. The five priorities were: reinvigorate and rejuvenate the customer experience, work with vendor partners to innovate and drive value, attract and inspire leaders and employees, increase ROIC for investors, and continue leadership role in positively impacting the world (community impact). The most strategically significant tactical decision underlying customer-experience reinvigoration was comprehensive price-matching. Best Buy would match prices from Amazon, Costco, Walmart, Newegg, and other competing retailers at point of sale — eliminating the showrooming arbitrage that had been the structural problem.

The price-matching decision was contested internally and externally. Critics argued Best Buy could not afford to give up the margin difference. Joly argued the margin difference was already being lost to showrooming — the only difference was whether Best Buy lost the sale entirely or kept the sale at lower margin. Combined with other tactical changes (operational cost reductions, supply chain optimisation, employee scheduling and compensation restructuring, vendor co-marketing partnerships including store-within-store concepts for Apple, Samsung, and Microsoft), the price-matching gave Best Buy the price competitiveness it needed to keep customers in stores.

The 2013-2017 execution and results

Through 2013-2017 the Renew Blue execution produced sustained results. Same-store sales improved. Operating margins recovered. Geek Squad and in-home advisor services expanded into adjacent revenue streams beyond product sales. Vendor partnerships deepened: Apple, Samsung, Microsoft, Sony, and others operated store-within-store concepts inside Best Buy locations that gave both Best Buy and the vendors better customer experience. Best Buy's online presence improved substantially. The combination produced revenue stabilisation followed by growth, margin recovery, and stock-price appreciation.

From November 13, 2012 (Renew Blue announcement) to September 18, 2017 (when Joly declared Renew Blue complete) Best Buy stock rose 213 percent. The S&P 500 over the same period rose approximately 100 percent. Best Buy outperformed the market substantially during the Renew Blue period, an unusual result for a retailer that had been widely viewed as terminally threatened five years earlier. In early 2017 Joly announced that Renew Blue had completed its objectives and Best Buy was pivoting to the “New Blue” growth strategy emphasising health (the Best Buy Health business including GreatCall acquisition), services, and continued vendor partnerships.

How RGM thinks about retail turnaround

When clients ask about retail turnaround strategy, the Best Buy Renew Blue case is the defining recent reference. Three structural lessons. First, the price-matching decision was the right strategic move precisely because it acknowledged reality. Best Buy was losing the margin to showrooming whether it price-matched or not; price-matching kept the customer relationship and let Best Buy capture services-and-attachment revenue around the lower-margin transaction. Refusing to price-match would have been emotionally satisfying but strategically wrong. Second, the multi-pronged execution mattered. Price-matching alone would not have produced the turnaround; the operational cost reductions, vendor partnerships, services expansion, and employee-experience improvements compounded into the broader recovery. Single-issue turnarounds rarely work. Third, the CEO outsider perspective helped. Joly had no electronics-retail background and was willing to make decisions (price-matching, vendor store-within-store concepts) that long-time Best Buy executives might have resisted.

The pattern is hard to copy in retail categories where the underlying competitive dynamics are different. RadioShack tried multiple turnaround approaches and failed; Sears tried for years and failed; JCPenney has cycled through multiple CEO-led turnarounds with mixed results. The Best Buy Renew Blue success required a CEO willing to commit to the harder operational decisions, vendor partnerships that compounded over years, and a category (consumer electronics) where in-store experience could be made meaningfully better than pure-online alternatives. We tell clients in retail to study Best Buy carefully but also to be honest about whether their category-and-competitive-position supports comparable transformation.

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