Q&A: Best Buy’s Barry Judge

Best Buy reported a 15 percent drop in first-quarter profits yesterday, but chief marketing officer Barry Judge remains confident the world’s largest electronics retailer can hold its own in tough times. And, now that rival Circuit City’s gone bankrupt, it’s going full throttle with an ongoing push for its “True Stories” campaign, which competes aggressively with Walmart on price. But yellow tag aside, Judge said Best Buy’s key selling point, in a tough economy, is how its employees help consumers “before, during and after the sale.” Same-store sales were down 5 percent in the U.S., but Judge says Best Buy still has plenty of opportunity to win consumers over, including a new wave of ads from its in-house agency, Yellow Tag Productions. (One shows a blue shirt worker, Rachel, answering a Walmart shopper’s call for help, and eventually winning him over.) Judge said these and other “true stories” would likely increase the retailer’s market share in key consumer electronics categories. Some excerpts from a recent conversation are below.
 
Brandweek: Best Buy first debuted its “True Stories” campaign as part of last year’s holiday push. How has it evolved? Where are you taking it?
 
Barry Judge: “True Stories” was developed almost a year ago. And really, what it was designed to do was bring to life our product, which is our people. When you think of Best Buy and how competitive it is going forward, a lot of it is in the space of we are the best before, during and after a sale. We’ve got people to help you. We’ve got product assortments that are very broad that can help meet those needs and we have the service to back it up. We’re telling real stories about how we can help consumers get what they need, as well as the most efficient way to get that message out. It’s part of what we’ve always wanted to do, which is to celebrate and make the blue shirts front and center. We always knew we had a great story to tell and that was the genesis of it.
 
We’ve run the same format [of ads] for the past eight months or so. And every month, when we run the commercials, we get another call for stories based on the product we might be selling at that time. We’ll get six or seven hundred stories back, we’ll get it down to a small number that we think may be ready for prime time and then we’ll narrow it down to one or two. On Bestbuytruestories.com, you’ll find interviews that never made it to TV. It gets into the human part of Best Buy, the human part of our brand.
 
The “Rachel” ad recounts how one employee (Rachel) helps win over a Walmart shopper looking for product information. (Her knowledge and friendly attitude convince him to make the switch.) Would you call this aggressive advertising? How does this figure into Best Buy’s strategy to attract more customers in tough times?
 
Our value proposition is our people: how they help you before, during and after the sale. With before, it’s how they help you find the right things, and with the after, a lot of it has to do with the Geek Squad — delivering, setting up, and if it breaks, we fix it. Our ad campaign is trying to land that.
 
In the ad, we are talking about how aggressive we are on price. Our prices are as good as anyone else’s out there. We thought it was the most authentic, genuine and subtle way to bring out our price match guarantee.

 
How did this ad test? What kind of feedback did you get?
 
The quantitative research told us it stood out. [Those shown the ad said,] “It told me something new and [reinforced] the price match guarantee.” It suggests that Best Buy was different and better than the competition. [After all,] we have a big, yellow price tag on our door. Price is simply important to us.
 
Best Buy’s first-quarter profit was down 15 percent and it’s still seeking weak consumer demand for electronics (videogames, appliances, etc.), even though rival Circuit City went bankrupt. How would you characterize the state of consumer spending at the moment?
 
We made more money this year than last. Why it’s reported as less is we took out a restructuring. We had some headcount adjustments this year. But we made more money. Our top line in the U.S. was about flat. Same-store sales were down 5 percent domestically. We picked up more market share than anyone else. We are doing extremely well in a tough economy. We believe it has bottomed out. However, the category is still soft. It is lapping some pretty strong numbers last year. When everyone reports the numbers, you will see a bit of share picked up by Best Buy and less share by everyone else.
 
Are you branching out into other product categories to help offset sluggish sales?
 
We have a number of tests going on. Our big entry into mobile phones was a result of testing mobile phones several years ago. Retailers from Target to Walmart are expanding their assortments. Apple didn’t sell phones [until] two years ago. It’s not to offset slowing growth, it’s more to fill consumer demand. We are expanding our assortment in other areas, but we always will be testing new things. It’s done to expand our market size, not to adjust for sluggish demand.
 
What’s your biggest competitive threat now that Circuit City is no longer in business?
 
The market remains very competitive. We have the market share lead by far. [Our market share was 21.2 percent] and we also picked up more market share than anyone else. We have a higher share in some categories other than that, but there is plenty of the market that has yet to be filled by us. Our focus is to wrap our value proposition around service before, during and after the sale, at a great price. There is a lot of opportunity for growth.
 
How do consumers view electronic product purchases in a recession? Are these seen as small indulgences or luxuries consumers can still afford in tough times?
 
Technology is becoming ever more important in people’s lives. When they think about discretionary purchases, I am not sure anymore if a cell phone is discretionary — or if a notebook computer, or any other tool we live our lives with is. That is what is different today than five years ago. The technology is a central part of who you are and how you get things done.