1. Background,Camper, Best Buy
Kevin Plans and Vision

2. ECR Europe
Shrinkage Group
Measuring “Hot Products” in Retail
Best Buy Case Study

3. AGENDA
 Introduction to Best Buy
 Best Buy Shrink Journey
 Understanding ‘Hot Products” – Best Buy Lens
 Best Buy Cycle Count Program
 Summary

4. BEST BUY, INC.
INTRODUCTION

5. Best Buy – Who are We?
 Founded in 1966, under the name of “Sound of Music”, (nine
stores) and based in Richfield, Minnesota
 In 1983, changes name to “Best Buy” and began pioneering the
electronics superstore concept – “Big selection, low prices and
a grab and go environment”
 2004, Forbes names Best Buy “Company of the Year”
 Today, BBY operates a global portfolio of ten brands with nearly
4,100 stores and 155,000 employees worldwide
 Operates in the United States, Canada, Turkey, China Mexico,
and just recently opened our first store in the UK

7. BEST BUY, INC
SHRINK HISTORY

8. SHRINK HISTORY
 BEST BUY IS KNOWN FOR
THE LOWEST CE SHRINK
RESULTS IN THE INDUSTRY 1.40
1.20
 UNFORTUNATELY, THIS
WAS NOT ALWAYS THE CASE 1.00
 1995/1996 ‐ WORST SHRINK 0.80
PERFORMANCE 1.12% 0.60
 SEVERAL CHANGES 0.40
HAPPENED (LABOR AND
CCTV’S ADDED, PRODUCT 0.20
LOCKED UP, OVERBUDGET 0.00
MEETINGS, ETC…) HOWEVER, 1996 1997 1998 2000 2002 2004 2006 2007
DID THESE CHANGES HELP? BBY 1.12 0.83 0.62 0.39 0.37 0.35 0.38 0.37
WHAT WAS THE #1 CHANGE THAT MADE
sin(x) cos(x/2)]1/2 ∙ [sin(x/2) cos(x/4)]1/4 ∙ [sin(x/4) cos(x/8)]1/8 ∙ ...
THE DIFFERENCE?

10. For it was our PEOPLE who introduced us to what is today
fondly known as our company shrink plan: G.B.O.T
GENERAL MANAGER 3RD INTERVIEW
BAROMETER MANAGEMENT
OVER BUDGET MEETINGS
TALKING SHRINK

11. HOT PRODUCTS
UNDERSTANDING / LEAKY FAUCET

12. UNDERSTANDING
 80% shrink comes from 20% of sku’s
 Products that have high market value
in terms of “want” and “need”
 Can be identified through highest
vendor shrink and highest sku shrink at
store level
 Key Product class that impacts the
entire organization – i.e. leaky faucet

13. FY10 – SHRINK RESULTS
Class Class Name Shrink $
VIDEO GAME
92 SOFTWARE (18,167,809)
160 MP-3 DEVICES (9,453,346)
140 MOBILE COMPUTING (9,188,477)
VIDEO GAME
96 HARDWARE (6,256,339)
276 FLAT PANEL TV (5,935,089)
53 DIGITAL CAMERAS (5,207,965)

14. “Fixing the Leaky Faucet”
 Focus on the vital few amongst the trivial many
 Greatest return in the quickest time
 Generate company wide engagement
 Vendor ownership and assistance (i.e. source tagging,
Alpha security solutions)

15. “GENERATE COMPANY WIDE ENGAGEMENT”

16. HOT PRODUCTS
BEST BUY’S CYCLE COUNT
PROGRAM (ROLES / TOOLS / BENEFITS)

17. KEYS TO A SUCCESSFUL PROGRAM
 Establish a schedule – start small and work toward a 12
week calendar
 Constant Preparation – Sales associates prepping
departments at closing.
 Counts should be completed in the morning
 All previous days receiving’s , transactions, deliveries
must be reconciled before counting
 Openly communicate results

18. ROLES AND RESPONSIBILITIES
 Warehouse Employees
o Oversee the entire cycle count process
o Download cycle counts from the 12 week cycle count calendar
o Cycle count deviations are identified and adjustments are processed
o Product Process Manager communicates weekly shrink results
 Store Employees
o Participate in the cycle count program
o Help research and resolve any Cycle Count discrepancies
o Preparation of their departments
 Store Manager
o Ensure cycle counts are maintained on schedule.
o Ensure all inventory adjustments are submitted on a weekly basis
o Leadership discussion weekly

19. TOOLS – CYCLE COUNT CALENDAR

20. TOOLS – RETAIL SHRINK BAROMETER

21. BENEFITS
 Replenishment – Eliminate customer disappoints
 Narrows the gap when discrepancies actually occurred.
Able to diagnose the potentially problem more
expeditiously.
 Employee awareness of “hot zones” during morning chalk
talks.
 Employees walking through “hot zone” areas of the store –
regardless if it is their department or not

22. HOT PRODUCTS
SUMMARY

23. SUMMARY
 Ask and Listen to your employees ‐ they will have the
answers
 Keep your cycle program small at first then grow
 Generate company wide engagement – constant
communication (Be Open and Transparent)
 Leadership commitment to the program

24. THANK YOU

25. BRIANN DUNN, CEO, BEST BUY
EXECUTIVE MESSAGE

26. EXECUTIVE MESSAGE
 Everyone has to think and act like a owner of the
company
 Listen to customers and employees
 Embrace challenge and change
 Ordinary people with a shared mission can achieve
extraordinary things