To keep growing, incoming Best Buy CEO says he first wants to go smaller

Best Buy faces a pivotal moment as it looks to rejuvenate its performance under new CEO Jason Bonfig, who spoke candidly with CNBC about his plans. The electronics retailer has faced declining sales for several years, citing lower consumer confidence, fewer tech innovations, and a slowing housing market as contributing factors. In response, Best Buy announced Bonfig as his successor to Corie Barry, the current CEO, this fall.

During his preparation for the role, Bonfig has outlined four key objectives: positioning Best Buy as a retail and technology company, expanding its reach, elevating the customer experience, and emphasizing a human-centric approach.

To achieve these goals, Bonfig is exploring ways to capitalize on the artificial intelligence boom and Best Buy's position within it. Recently, the company opened two new stores to illustrate this strategy: one in Jonesboro, Arkansas, and another in Cape Cod, Massachusetts. Bonfig explained that the company is focusing on smaller, 12,000 to 15,000 square foot stores, as opposed to its usual medium-sized 20,000 to 25,000 square foot locations.

The rationale behind this approach is to enter markets where a traditional-sized Best Buy store would not be viable, but where a smaller footprint could still offer significant reach. Smaller stores, according to Bonfig, enhance the company's presence and provide an opportunity for customers to visit more frequently, both in-store and digitally.

Bonfig also highlighted the positive impact of having smaller stores close to customers, noting that it not only boosts in-store visits but also increases customer engagement through the app and digital channels. This strategy is evident in the Jonesboro store, which reopened in a town where the previous location was destroyed by a tornado.

The store's success underscores the effectiveness of this approach in reaching customers in vibrant markets that are too small for larger outlets. Bonfig also mentioned a slightly larger store in Cape Cod, with 28,000 square feet, as another example of the company's commitment to finding the optimal store size for each location.

He emphasized that these small-format stores are an enhancement to Best Buy's existing operations, not a replacement.

Despite recent challenges, including a 20% decline in stock value and fluctuating sales, Bonfig remains optimistic about Best Buy's future. He attributes the company's recent stagnation to a general pull-forward behavior from consumers during the pandemic, which led to an unprecedented demand curve that created a lull. Bonfig believes that Best Buy's recent performance doesn't reflect a loss of momentum, but rather a reset in the technology life cycle, with the company focusing on upgrading customer experiences, such as expanding TV selections and integrating AI tools like Meta's glasses.

For Bonfig, the success of his tenure as CEO will be measured by customer response, and he remains committed to leveraging Best Buy's core strengths while building upon the strong foundation set by previous leadership.