At Best Buy, Marketing Goes Micro

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Ballard: Trying to upend Best Buy's top-down planning

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Taking much of the heat from Wall Street is Ballard, who has run Best Buy's U.S. stores since September. She's trying to give local managers more leeway to set sales strategies, inventory levels, and product mixes. That may sound like Retailing 101: Give customers what they want. But it demands complex math from a big-box retail chain built on standard operating procedures, negotiated shelf-space deals, and headquarters-generated "planagrams," or floor plans. Big companies "make strategy creation this elitist space," says Ballard, 41, who started with Best Buy as an assistant manager in a Flint (Mich.) store.

The latest moves are just starting to upend Best Buy's rigid, top-down planning. Early this year, Savannah (Ga.) store manager Richard Gamble learned that more than 10,000 soldiers from two nearby Army bases were due to return home by September. He quickly assigned a team of employees with armed-forces family members to plan for the troops' arrival; the group selected seven product categories, such as Nintendo (NTDOY) Wiis and flat-screen TVs, that had either launched or fallen in price since the soldiers deployed. Gamble asked Minneapolis to increase his inventories of those goods by 40%. It complied, and he is expecting a sales lift from the bigger stock.

Local store managers are even influencing Best Buy's merchandising tactics. After getting numerous requests from troops set to redeploy, Gamble's military team placed an order for Panasonic (MC) Toughbooks, rugged laptops not usually carried at Best Buy stores. While he couldn't stock them for sale, he persuaded HQ to send him a few for display so soldiers could try them before ordering online from Best Buy. Such a request would have been "virtually impossible" two years ago, says Gamble. Even with a new store opening nearby, he expects the military push to help raise his sales this year by 7%.

The chain's shift in mindset requires a delicate balance: Adjustments spurred by local insight can boost sales, but they also can add risk and expense to operations. Of course, Minneapolis continues to roll out its national plans, but to fortify local insights the retailer is handing out financial modeling software so store managers can try "what-if" scenarios. Still, some changes have flopped. Relocating GPS devices to a different spot in a New York store did nothing to boost the products' sales. And local changes to "endcaps"—the display at one end of an aisle—have risked angering suppliers that paid for specific shelf space.

Some local novelties entail a lot less pressure. After the chairman of a local retiree club called the Golden Boys bought a high-def TV at the Mooresville (N.C.) Best Buy, store manager Walt Goney invited the club's members to come by at 8 a.m., two hours before opening time. Eighty-five members showed up for a hand-holding session on switching to digital television. They bought $350,000 worth of TVs and equipment that morning. The cost to Goney? Just $99 in labor, plus coffee and doughnuts.

McGregor is BusinessWeek's management editor.