Best Buy's turnaround: how Hubert Joly's 'Renew Blue' plan kept big-box electronics retail alive against Amazon
In 2012, Best Buy was widely expected to follow Circuit City into bankruptcy. The stock had fallen from $50 to under $12. Comparable sales were declining. The company had become synonymous with 'showrooming' — the phenomenon where shoppers visited Best Buy stores to touch and try products, then bought them on Amazon for less. The board hired Hubert Joly, a former Carlson Companies CEO with no consumer-electronics retail experience, as turnaround CEO in September 2012. Over the next seven years, Joly's 'Renew Blue' plan returned Best Buy to growth: price matching with Amazon, in-store consulting expansion, vendor partnerships that turned stores into showcase spaces, and Geek Squad expansion into in-home tech services. By the time Joly stepped down in June 2019, Best Buy had returned $7 billion to shareholders and the stock had recovered to ~$70. The Best Buy turnaround is studied as the most-studied case in big-box retail survival against Amazon.
- Story: Best Buy in 2012 was widely expected to follow Circuit City into bankruptcy. Hubert Joly, hired from Carlson Companies, executed a seven-year turnaround based on price-matching Amazon, monetizing physical real estate via vendor partnerships (Apple, Samsung, Microsoft store-in-store), and expanding Geek Squad into in-home services. Stock recovered from $12 to ~$66 during his tenure; the company returned ~$7B to shareholders. The case is the most-studied example of big-box electronics retail survival against Amazon.
- Why it matters: Best Buy's turnaround is the worked example for surviving a structurally lower-cost competitor: reframe the threat, monetize unique assets, build services that the competitor can't replicate.
- Takeaway: Fighting price competition with a structurally lower-cost competitor is usually a losing strategy.
- Takeaway: Reframe what competitors do (showrooming) from threat to channel.
- Takeaway: Build revenue around unique capabilities (vendor partnerships, in-home services) that the price-leader cannot match.
Best Buy turnaround — the four-step story
Best Buy turnaround at a glance
Quick facts
The 2012 crisis context
Best Buy in 2012 was in genuine distress. The company had reported same-store-sales declines for several consecutive quarters. The CFO, COO, and CEO had all departed in 2012. Circuit City, Best Buy's longtime big-box electronics competitor, had liquidated in 2009; analysts widely expected Best Buy to follow the same path. The stock had lost approximately 75% of its value from 2010 peak.
The underlying problem was 'showrooming': consumers using Best Buy stores to evaluate products in person and then buying them on Amazon, which offered lower prices, no sales tax in many states, and free shipping for Prime members. Best Buy's high real-estate, inventory, and labor costs made it structurally unable to match Amazon's prices while preserving margin. The strategic question was whether big-box electronics retail could survive at all.
Hubert Joly's 'Renew Blue' five-point plan
Joly, hired in September 2012 from Carlson Companies (a hospitality and travel conglomerate), spent his first weeks in Best Buy stores listening to associates and customers. The Renew Blue plan announced in November 2012 had five priorities:
- Reinvigorate the customer experience: improved store layouts, training for blue-shirt associates, longer hours.
- Attract and inspire leaders and employees: cultural reset, employee compensation linked to performance, leadership development.
- Work with vendor partners as strategic partners: turn Best Buy stores into showcase spaces vendors would pay to be featured in (Apple, Samsung, Microsoft, Sony all eventually built store-in-store experiences).
- Provide attractive returns to investors: rationalize cost structure, return capital to shareholders, restore dividend.
- Continue to be a positive force in society: education programs, sustainability initiatives, community engagement.
The price-match pivot and the showrooming reframe
The most consequential single decision was the price-match guarantee against Amazon and 19 other major online retailers, announced in late 2012 and made permanent in 2013. This reframed showrooming entirely: instead of fighting the practice (which was structurally impossible), Best Buy embraced it. Customers could come to Best Buy to touch and try, and Best Buy would match online prices on the spot.
The economics worked because Best Buy's vendor-partnership strategy meant the company captured margin from vendors paying for showcase space, not just from the consumer transaction. Apple's investment in Apple-experience areas inside Best Buy, Samsung's investment in Samsung experience zones, and Microsoft's investment in Microsoft Stores-within-Best Buy created revenue streams that subsidized the price match. The vendors needed physical retail presence to demonstrate complex high-touch products (premium TVs, audio, computing); Best Buy provided that presence and charged for it.
Geek Squad, in-home consulting, and the services pivot
Best Buy had acquired Geek Squad in 2002, but under Joly the services business expanded substantially. The In-Home Advisor program (launched 2017) sent consultants to consumers' homes to advise on technology setup, smart-home installation, and product selection. Total Tech Support (now Best Buy Tech Support) became a subscription service for ongoing tech support across all of a consumer's devices.
The services strategy mattered for two reasons. First, services revenue carried much higher margin than product sales. Second, services created a competitive moat against Amazon — Amazon could match Best Buy on product price, but couldn't easily replicate the in-home advisor and ongoing tech-support relationships. The services pivot is widely cited as the strategic differentiation that allowed Best Buy to escape pure price competition.
How RGM thinks about big-box retail survival strategies
Best Buy's turnaround is the case study most relevant when clients in retail (or any commoditizing-product category) face price competition from a structurally lower-cost competitor. The strategic moves Joly executed have a generalizable pattern: reframe the threat (showrooming as a customer-acquisition channel rather than a sales-loss channel), monetize the unique assets (physical real estate as vendor showcase space), and build services revenue that creates ongoing customer relationships.
The honest framework: when a structurally lower-cost competitor enters your category, fighting on price is usually a losing strategy. The winning strategy is to identify what your operation can do that the lower-cost competitor cannot, and to build revenue around that unique capability. Best Buy's unique capability was physical product showcasing and trained-associate consulting; the company built vendor-partnership and services revenue around those capabilities while matching Amazon's prices on the commodity-product transaction. We tell clients facing similar pressures that the goal is not to win the price war but to make the price war strategically irrelevant by competing on something else.
Frequently asked questions
Has the Best Buy turnaround held up post-Joly?
Partially. The 2020-2021 pandemic created a consumer-electronics buying surge that benefited Best Buy disproportionately. The 2022-2024 period has been more challenging, with comparable sales declining as consumer electronics demand normalized and discretionary spending tightened. The strategic positioning (vendor partnerships, services, price-matching) remains in place but the business is going through a cyclical down period.
How did Hubert Joly come from hospitality to electronics retail?
Joly's prior background was Carlson Companies (Radisson, T.G.I. Friday's, Carlson Wagonlit Travel) and EDS Europe. He had operating-leadership experience but no consumer-electronics retail experience. The Best Buy board's view was that the company needed an operational leader who could execute the cultural turnaround, and that domain experience was less important than turnaround discipline. The bet paid off.
What about Circuit City — why did Best Buy survive when Circuit City didn't?
Multiple factors. Circuit City made several strategic missteps in the mid-2000s (firing higher-paid commissioned salespeople to save costs, weakening the customer-service differentiation that had been its advantage; inadequate response to Amazon early). Best Buy's later turnaround occurred under crisis conditions and after the Circuit City example was visible — the Best Buy board had urgency Circuit City's board had not had. Best Buy also had stronger vendor relationships and a larger services business at the start of the crisis.
Did the price-matching guarantee actually hurt margins?
Initially yes, but less than expected. Best Buy's analysis was that the customer-acquisition value of in-store visits (with associate conversation and add-on services attachment) more than offset the margin compression on price-matched transactions. Total transaction value per customer rose even as per-unit-product margin on commodity SKUs compressed.
How important was the Geek Squad business?
Important and growing in importance. Geek Squad and the broader services business carried much higher margins than product sales and created recurring customer relationships. By the late 2010s, services accounted for a high single-digit to low-double-digit share of revenue but a higher share of profit. The services pivot is widely cited as the most important strategic differentiation post-2012.
Sources & references
- Hubert Joly book 'The Heart of Business' — Joly's first-person account of the turnaround.
- Harvard Business Review case study — HBR analysis of the turnaround playbook.
- Best Buy investor relations — Best Buy 10-K filings and historical financials.
- CNBC turnaround retrospective — CNBC coverage of Joly tenure outcomes.