all about outlets & open-box

BEST BUY INTERNAL USE ONLY. DO NOT COPY, PUBLISH OR DISTRIBUTE. THE MATERIAL IN THIS DOCUMENT IS CONFIDENTIAL TO BEST BUY. 1

All About Outlets & Open-BoxSy Paulson, Outlet Strategy & Operations

Dan Proctor, Outlet Strategy & Operations

Andy Kalweit, Reverse Supply Chain

Heather Bergerson, Reverse Supply Chain

BEST BUY INTERNAL USE ONLY. DO NOT COPY, PUBLISH OR DISTRIBUTE. THE MATERIAL IN THIS DOCUMENT IS CONFIDENTIAL TO BEST BUY.BEST BUY INTERNAL USE ONLY. DO NOT COPY, PUBLISH OR DISTRIBUTE. THE MATERIAL IN THIS DOCUMENT IS CONFIDENTIAL TO BEST BUY.

Why do we sell open-box?

• Offers great value to customers who want a quality product at a discount

• Differentiator with many deals available same-day and only at Best Buy

• 5th largest business at Best Buy; $1.7+ billion annually

• Returns programs can improve vendor profitability by 8 figures

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Outlets & Open-Box This Holiday

Why you should be excited about the future of Outlets?

• Outlets offer a destination for customers to find great deals on open-box available same-day

• Outlets attract new customers who don’t currently shop Core Best Buy stores

• 16 Outlets resell more open-box Major Appliances weekly than 1,000 Core stores

• Expanded Outlet category assortment including Computing and Home Theater

Large product open-box support this holiday

• DRAIN Replenishment system allocates Major appliances to Outlets and Retail locations to balance inventory and optimize resale

› DRAIN ensures Outlets and Core stores don’t receive Majors over their capacity

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• Reverse Supply Chain KPIs include:› Opened return rate calculated as open returns out of gross revenue› Open-box revenue includes total gross open-box sales over the last 12 months› Open-box recovery is calculated as revenue against product cost

Check out the Excel file in the booth!

• Filter for your store, District or Territory

• All data covers performance for the last 12 months

BEST BUY INTERNAL USE ONLY. DO NOT COPY, PUBLISH OR DISTRIBUTE. THE MATERIAL IN THIS DOCUMENT IS CONFIDENTIAL TO BEST BUY.BEST BUY INTERNAL USE ONLY. DO NOT COPY, PUBLISH OR DISTRIBUTE. THE MATERIAL IN THIS DOCUMENT IS CONFIDENTIAL TO BEST BUY. 3

Photos are live for open-box TVs & Majors.

• Outlets have taken thousands of photos since the program launched for visibility to customers browsing online

• Customers browsing for a specific product can see that a picture is available, even if it is not in-stock in their “home” store

• Add-to-cart rates with photos are significantly higher than without

• Dedicated photo wall is being built in Pineville (#2653)

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Generic Box Solution

• 25 core stores are receiving a generic box kit, which will be used to box up TVs with no factory box, for movement to an Outlet.

• Will be tested in CFCs, Charlotte, Houston, and Minneapolis physical remodel stores.

• Strong sell-through performance when tested in Eden Prairie.

• Solution is meant for customer take-with vs. reusing (like a TV Taco)


Today’s Outlet Portfolio

Our current portfolio of 16 Outlet SAS stores exist in markets throughout the US, with their primary business purpose to relieve open-box appliance and TV pipeline pressures.

These locations have proximity next to or a short distance away from big box stores and are now considered a true retail asset in the Marketplace.

Outlet employees report through a nearby supporting store’s General Manager.

Their supply of product is almost exclusivelyfueled by service and distribution centers returns & repairs.

Outlet District Market Territory Outlet Manager Support Store Supporting GM

2447 Chicago IL 92 19 2 Garcia, Ricardo 311 Flores, Jesse

2633 Dallas TX 12 15 2 Bates, Michael 256 Sphar, Loren

2635 Moreno Valley CA 24 10 1 Arganda, Richard 392 Galbraith, Tiffany

2637 Lynwood WA 45 1 1 Leggett, Shaun 477 Adams, Kellie

2638 Lutherville MD 25 23 4 Adrian Villar 149 Dagostino, Trang

2639 San Rafael CA 62 8 1 Madison, Jan 1021 Moore, Todd

2640 Chesterfield MO 5 13 2 Vandike, James 833 Roseberry, Scott

2641 Kennesaw GA 18 6 4 Johnson, Deshawn 501 Howard, Jim

2642 Ocoee FL 67 31 4 Pamplin, John 1156 St, Cyr, David

2643 Houston TX 8 16 2 Ryan Goldwitz 214 Hill, Larry

2644 Eden Prairie MN MN Mkt. MN Mkt. 2 Sandler, Martin 611 Shaw, Josh

2645 Aurora CO 9 2 1 Guerue, John 217 Cohn, Phillip

2650 Montclair CA 102 9 1 Castaneda, Beronica 131 Campbell, Thomas

2651 Marlton, NJ 38 24 3 Serrano, Sam 1098 Yost, Michael

2652 Brockton, MA 107 5 3 Silva, Jess 436 Hawley, Tim

2653 Pineville Char. Mkt Char. Mkt 4 Edwards, Kyle 2653 Burns, Brian

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The Pineville ChapterStrategic Intent: Launch a cohesive destination for auto installation, repairs, and open-box product sales to test hypothesis about customer experiences, business outcomes, and market strategy impacts.

Pineville offers a unique opportunity to deploy and test many of these elements in a single location.

Open-Box Clean MarketMove open-box product from a wide range of

categories out of core stores in the market, and sell in outlet

Fix it & Sell it where it landsKeep all open box product within the Pineville location by

leveraging resources and capabilities to both repair and sell in that area

Omnichannel OutletExpand customer-facing capabilities of outlet, such as

online sales, fulfillment for both large & small product, and work to appeal to a new consumer

segment

Market Service Repair NetworkImplement hub & spoke model to efficiently meet customer demand. Enhance diagnostics at spoke locations, expanded repair and customer experience at hub.

Autotech Mega HubExpand space and resources in a central location, while leveraging fewer standard bays that maintain proximity to customer

In-Market ShuttlesRegular shuttles to & from nearby stores

regularly flow repair & open box products to this location

In-Home RepairScale W2 Model to expand service offerings and proactively mitigate large product issues

Pineville Outlet & Local Service

Center


The Pineville Chapter

Our first outlet which ‘cleans’ an entire Marketplace, selling all open-box product in one centralized location.

All categories of open-box, clearance, and other inventory without a home in the Charlotte market will be sold here.

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Pineville Map

Green: Open-Box Photo Wall

Yellow: Appliances

Red: TVs

Blue: Small product

No color: Services elements


Pineville Store Design | Service Components

PrecinctSmall Product Hardware

HUB PhonesPC Software &

Hardware*Open-Box Parts Hub

Small Product Hardware

Large Product Hardware

Outlet Autotech Mega Hub

262 – Pineville x x x x x x x x

Parts

PartsLarge Product Hardware

Large Product Hardware

Large Pro

du

ct Hard

ware


Recent Outlet Headlines

Over $16M OI benefit this year with 73% net recovery rates. $8M OI Benefit in FY21.

Pineville is open! Outlet sales floor opened for business on 8/20. Phase two opens 10/1. The Outlet and Repair Center op model and headcount are now approved.

All Outlets are now aligned to core retail pricing, as of mid-August. Deployed coupon to support slow moving inventory.

Each location will receive the Brockton and Pineville line-list new-in-box accessory planogram.

Received approval for purchase of OB boxes, supporting the CFC & Charlotte remodels.

OB Photo capability is now live in all Outlets and core stores.

Brockton participated in the first major Tax-Free Event weekend for an Outlet. Ocoee participated in a computing-specific event.

After our Return Promise alignment to core retail on 7/2, we have seen minimal impacts to the R/E rate.

Outlets have fulfilled most of the large product 3PL same day delivery orders.

Outlets will migrate into core retail reporting hierarchy in September.

Refreshed store signage coming in October.

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