Best Buy aims to bridge the gender gap

As Best Buy Co. faces heightened competition from rivals Wal-Mart Stores Inc. and Amazon.com Inc., the largest U.S. electronics retailer is confronting a longstanding disadvantage: fewer women shoppers.

Best Buy's customers and worker are overwhelmingly male, a vestige from its days as a seller of speakers and stereo equipment. While Best Buy estimated earlier this year that it commanded roughly 22% of U.S. consumer electronics sales, its share of sales to women was just 16%, and only 31% of store workers are women.

Now, the Richfield, Minn.-based retailer is trying to bridge its gender gap. It is empowering female workers and tapping teenage girls to suggest new ways to sell to women. The push reflects a realization that in some of the hottest areas of electronics retailing smart-phones and other mobile devices women are becoming the most coveted customers.

Best Buy reported on Tuesday nearly flat fiscal first-quarter profits of $155 million compared to $153 million a year ago, and its stock plunged 6%, or $2.49, to $38.56 in 4 p.m. trading on the New York Stock Exchange. Results show the retailer's challenge after the temporary boost from the 2009 liquidation of former rival Circuit City Stores.

But while sales of televisions and video games were down for the quarter ended May 29, sales of cell phones, appliances and laptops are increasing. All are products where Best Buy reports rising market share among female shoppers. Overall sales rose 2.8% at stores, web sites and call centers open at least 14 months.

Best Buy Mobile, the company's fast-growing chain of mall-based, gadget stores, has allowed the retailer to broaden its base by reaching women and teenage girls who did not shop at Best Buy's big-box stores.

"We are accessing in the mall a largely female customer base, and we are doing a very good job" at Best Buy Mobile, Chief Executive Brian Dunn said in an interview Tuesday.

Executives said the best insights on reaching women have come from the company's "Women's Leadership Forums," loose-knit groups of female workers and customers that meet around the country.

The groups helped increase appliance sales by suggesting that showrooms be redesigned to resemble kitchens. A group in Wisconsin created a customer loyalty plan that allowed women there to donate loyalty points to schools.

The groups led to local businesswomen advising on regional strategy, and others that help women workers balance family and work demands. Most recently, they spawned teenage consultants who help the retailer sell phones and videogames to young people.

"BlackBerries: those just aren't cute," said Taylor Brittian, 14, who recommended spotlighting iPhones and colorful phone cases in the front of Atlanta's Best Buy Mobile stores. Another teen idea: sanitizer beside the videogame test kiosks.

Despite early successes, some Best Buy executives questioned the point and cost of the women's groups.

"People thought it was some Oprah book club," said former Best Buy executive Julie Gilbert who came up with the forums. She is now a consultant helping other companies address problem clienteles.

Still, Mr. Dunn and other top Best Buy executives are now behind the idea, seeing it as a crucial way to even the field against Target Corp. and Wal-Mart, where executives have long called their target shopper she.

Best Buy said Tuesday that it planned to devote more floor space to video games and would roll out used-games sales to all stores by summer. While video game sales are largely to male customers, Mr. Dunn said used-game trading was "very important to the moms out there" because children tend to tire quickly of games. The sale of used game should prove a hit with women with young children.

"My wife is quite thrilled; she's been pushing me hard on the used gaming solution," he said.

Quarterly revenue climbed 6.9% to $10.79 billion, but the earnings per share of 36 cents was far below the 50 cents expected by analysts polled by Thomson Reuters.

Yet despite the mediocre quarter, Mr. Dunn reiterated that he expects Best Buy to hit its annual earnings targets of $3.45 to $3.60 a share, an increase of 10% to 14% compared to fiscal 2010, and for revenue of between $52 billion and $53 billion, up 5% to 7% from last year.