The brick-and-mortar retail industry has been on the decline for the past several years, and Best Buy is well aware of this fact.
The National Retail Federation (NRF) predicts that e-commerce will grow 8% to 12% in 2017, eclipsing last year’s 3.8% gain. This estimate suggests that online retail sales will be between $427 billion and $443 billion in the current year.
Brick-and-mortar businesses have felt the full brunt of this shift as foot traffic declines, prompting companies such as Best Buy to invest in its ecommerce segment. The retailer revealed this week that it will spend close to $700 million in boosting online sales and its supply chain, ahead of its previous projection of $650 million.
With ecommerce giants such as Amazon expanding their selection of smart devices and laptops, Best Buy is taking an aggressive approach towards improving margins.
The company reported its fiscal second-quarter results Wednesday, Aug. 29, unveiling a 21% year-over-year increase in earnings thanks to a 31.2% surge in e-commerce sales, with this figure $1.1 billion.
"What we're seeing today is the continued effect of the cumulative investments we've made in simplifying and streamlining the customer experience,” wrote Best Buy CEO Hubert Joly in a statement.
The retail giant is launching other online initiatives to reel in consumers, including an in-home advisory program that sends workers to customers’ homes who offer free product advice.
Best Buy shares are up 27% year-to-date, with the company now forecasting comparable sales to grow 4.5% to 5.5% in its third quarter. The retailer also updated its fiscal 2018 outlook as it now expects revenue to grow 4% year-over-year, up from its previous guidance of 2.5%.
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