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The Customer Centric Transformation

Bob Willett CEO, Best Buy International & CIO

Thursday, February 14th, 2008

22

WHAT – are the strategic issues facing Best Buy?

WHAT – is Best Buy’s strategic response?

WHAT – capabilities are being deployed to enable the strategy?

The Transformation Agenda:

55

Driving real growth has become more Driving real growth has become more challenging and complex for today’s retailerschallenging and complex for today’s retailers

More Complex More Competitive More Sophisticated

• Multiple Channels and Formats• New Categories, especially

Non-Food and Services• Higher Service Levels

Demanded• Increased Globalization

• Intense Price Competition• Increased Promotions• Expanded Own Label or

Exclusive Offerings• More Robust Loyalty

Programs

• Enhanced Customer Insight/Segmentation

• Uptake of Analytics and Technology

• Alliances with Suppliers or Other Retailers

• Localized Assortment

77

We are seeking to differentiate We are seeking to differentiate through co-creation, services and through co-creation, services and solutionssolutions

Product and Exclusive Brand

Format / ChannelGeographic

Reach

Accelerated by Galaxy-MKII

US

Canada

Europe

GlobalExtension

ChannelExtension

MassProducts

Private Label(Insignia, Rocketfish)

New channels.com

Core Format

New formatse.g. Five Star

BBYMobile

Call CentersMagnolia

Future Shop

RangeExtension

China, Mexico Turkey

Solutions

Services

Most Retailers

BBY

Target

Walmart

Tesco

*

**

Services

Exclusive Brands

Geek Squad

88

Two major pillars: Customer Centricity and Efficient Enterprise

CustomerCustomerCentricityCentricity

Efficient Efficient EnterpriseEnterprise

18.8 16.88.6

SG&A costs% of sales

Cu

sto

me

r E

VA

%

Customer Deciles

Customer Profitability Distribution100%

- 100%

Supply ChainSupply ChainInformation TechnologyInformation Technology

EnablersEnablers Enablers

Enablers

99

The Co-Creation ExperienceThe Co-Creation ExperienceIn

stal

l

Rep

air

Research Contact

Store Pickup

Home Shipment

Hom

e

Del

iver

y

Order Management

Online

Sites

Call

Centers

Kiosks

Stores

Ser

vic

e

Co

mm

erce

Experience

Sh o

pF

u lfil

l

Schedule

Sign Up

Lear

n

CustomerS

ubscriptions

1. Mass2. Targeted3. Personalized4. Co-Creation

> Interaction> Seamless Multi-Contact Experience> Community & Social

Networks

Co-Create the

Purchase

1010

Multi Contact-Channel

Federa

ted

BB

Y M

ulti-C

hannel S

OA

Layer

Federa

ted

BB

Y M

ulti-C

hannel S

OA

Layer

International

Multi Brand

Federa

ted

BB

Y M

ulti-C

hannel S

OA

Layer

Federa

ted

BB

Y M

ulti-C

hannel S

OA

Layer

BBY CorporateUS, Canada, China

BBY Global EnterpriseMerchandizingSupply-Chain

LogisticsMarketing

AdvertisingServices

BBY Custome

r

Our Vision & Strategy provides customers with a seamless Our Vision & Strategy provides customers with a seamless experience across multiple brands, channels, geographies experience across multiple brands, channels, geographies and solutions in real timeand solutions in real time

1111

Customer Centricity – “Secret Sauce”Customer Centricity – “Secret Sauce”

Invite EmployeeIdeas

Honor UniqueCustomers

Provide End-to-EndSolutions

1212

Individualize

Leverage

Why does Best Buy need a BOB?

Products & ServicesProducts & Services

CustomerCustomerSegmentsSegments

Channels/Channels/StoresStores

InfrastructureInfrastructure

14

Our Brand is the Translation of this strategy. It Signifies the Amalgam of

Customer & Employee Centricity and What We Aim to Achieve

We promise to:Blow you away with the latest

& greatestTrusted Perspective

for Inspired Living

We promise to:Never leaving you hanging

We promise to:Deliver An Experience That Inspires You

We promise to:Make Sure You Know ALL That We Know

We promise to:Make a difference

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In closing…

How do we stay relevant to our customers and avoid extinction?

We must be prepared to:We must be prepared to:

Focus on the customerFocus on the customer Leverage new Leverage new technologiestechnologies Collaborate with one Collaborate with one anotheranother

Staying as we are is not Staying as we are is not an option !an option !