Best Buy Bets on AI as Consumers Avoid Big-Ticket Items
Best Buy is focused on digital innovation as shoppers continue to show caution.
The electronics retailer released quarterly earnings results Tuesday (March 3) that showed a 0.8% dip in sales as consumer demand softened during the holiday season.
With high interest rates and inflation continuing to put pressure on consumer spending, Best Buy is increasingly turning to artificial intelligence and its fledgling third-party marketplace to fuel growth.
During a call with analysts, management painted the picture of a customer base that is increasingly deliberate, waiting for promotional events. While the company saw its eighth consecutive quarter of growth in computing, fueled by laptop and accessory sales, those gains were tempered by declines in the home theater and appliance categories.
“Consistent with the past several quarters, we continue to see a consumer who is still spending, but is value-focused and attracted to sales moments,” Best Buy CEO Corie Barry said during the call.
While shoppers remain thoughtful when it comes to “big-ticket purchases,” they still show a willingness to invest in high-priced products when driven by “technology innovation,” she said.
Similar consumer hesitancy was reported last week by both Home Depot and Lowe’s, which said on their earnings calls that economic uncertainty was causing customers to hold off on big-ticket, discretionary DIY home improvement projects.
Against this backdrop, Best Buy is accelerating its tech investments. The company teamed with OpenAI to integrate its product catalog into ChatGPT, aiming to create what Barry referred to on the call as a “more seamless path to product inspiration.”
Furthermore, the retailer is working with Google on “agentic shopping” protocols to allow customers to purchase items directly through the Gemini app and Google Search, Barry said.
In addition to Best Buy’s agentic shopping initiatives, the company is scaling its digital marketplace and its retail media arm, Best Buy Ads, which nearly doubled its partner count in the last year, Barry said during the call.
The company expects consumers to spend part of their tax refunds at Best Buy during the first quarter, she said.
However, the PYMNTS Intelligence report “Tax Refunds and the Paycheck-to-Paycheck Consumer” found that many consumers who live paycheck to paycheck and struggle to pay bills will use their refunds to cover everyday expenses or debt.
“For most consumers living paycheck to paycheck, refunds act as catch-up money, not a savings boost,” the report said.
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