operational execution to support holiday omnichannel

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Operational Execution to Support Holiday Omnichannel Experiences


David GarciaVice President, Omnichannel Operations


Large Product Fulfillment

Kevin BalonSenior Vice President, Large Product Fulfillment


Our story.

FY18• Vendor performance

analysis

• NPS deep dives by location

• Analysis of large product processes and gap identification

FY19• New Delivery Pads

• Defined delivery vendor selection criteria and RFP processes

• Tested next-day delivery

• Reporting enhancements and continued analysis of delivery failure root causes

FY20• Dedicated Large Product Fulfillment team built

within Fulfillment Office

• Relocated Miami Delivery Pad

• Scaled next-day delivery

• Supply Chain scale of DRAIN application

FY21• Large Product Fulfillment team moves from many parts of the organization

to omni-channel leadership

• Systemic order failures reduced by over 50k during Holiday

• Launched Large Product Fulfillment Resolution Team to respond to in-the-moment delivery issues

• Launched same-day delivery in ~450 Big-Box locations and Outlet stores

• Home Delivery & Install Program begins, managing over 60 delivery & install-related initiatives

FY22

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Large Product Fulfillment

SOW: 7.5M

SOW: 8.3M

Appts: 3.2M

SOW: 9.4M

Appts: 4.4M

Appts: 4.2M

SOW: Scopes of Work

To remain competitive, we must deliver products when, where and how customers want them. We focus on speed, quality, and scale in service of our customers.

• Geek Squad delivery scale of DRAIN

• Expanded same-day delivery

• Launched in-transit inventory management, Streem video support, and customer self-serve order cancellation

• Further reduction of systemic order failures

• Implementation of narrowed delivery windows

• Delivery Pad expansions: New Orleans, Portland, Cincinnati, Jacksonville, Nashville, Salt Lake City

• Created Customer Advocate Team to proactively monitor high-risk orders

• Partnered with key vendors to staff a Vendor Advocate Program to address vendor-specific order issues

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Outcomes we are working towards.

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Employees trust the system, have the clarity, flexibility and process to complete the job for our customers without circumventing system or process.

Customer feels clear, confident and in control throughout the research, purchase, fulfillment and use of the product.

We’ve focused on sustaining a highly engaged and collaborative workforce, prioritizing training on safety, protocols, brand standards, professional development, and inclusion and diversity.

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More deliveries than ever!In an environment of uncertainty, customers are relying on us to come to their homes more than ever to bring them their large products.

290Kmore units

than last year

Maintain 98% Safety NPS score

Securing incremental resources to manage capacity and maintain Days Out target

Resolving technology challenges

Operational Planning


Investments in systems to reduce & address failures Supporting the customer’s shopping journey

Prevent System Issues53,000 less order failures because of BBY

systems not communicating properlyImproved reporting to enable performance

management of low performing 3rd party partners

Pre-Solve IssuesNarrowed delivery window to 4 hours night

before deliveryCustomer and Vendor Advocate teams resourced

with over 160 employees to proactively address issues

Communicate Better With Customers

Launch stops away for day of communication and appointment preparation

Customers say we keep them safe 96+% of the time

Done Right the First TimePilot Streem video support for site surveys/pre-

measure and LPFR75% more delivery trucks during peak Holiday volume and same-day delivery in ~450 stores

Resolve Issues the First Time & Fast

Scaling of in-transit rescheduling, enabling BBY to quickly reschedule failed orders

Significantly reduced wait times in LPF Resolution Center

Technology People & Process1 2

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How we will deliver this Holiday.


Small Product Fulfillment

Tony EngelSenior Director, Small Product Fulfillment


Our story.

FY12 – FY15• Launched Ship from

Store capability

• Switched from a “Delivery Window” to a “Get it By Date”

• Enabled Free 2-Day delivery

FY16 - FY18• Launched same-day delivery

to 40 major markets

• Offered Saturday delivery

• Expanded carrier partnerships (FedEx/USPS/Regionals/Gig)

FY19 – FY20• Deployed MECs and ASRS in RDCs

• Scaled late Cutoff times for next-day deliveries

• Tested Middle Mile delivery

• Created the Fulfillment Office to centralize decision making and accelerate growth

FY21• Built employee delivery capability

• Onboarded two new same-day carriers: Dramatically expanded footprint, capacity, and volume

• Leveraged robust Hub store approach for Holiday

FY22• CFC deployment

• Testing employee delivery cross dock model

• Middle Mile Scale

• Market testing even faster fulfillment speeds

Shipped 16M

Units

To remain competitive, we must deliver products when, where and how customers want them.

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Small Product FulfillmentShipped

61MUnits


Customer Experience

• Improve customer experience by reducing late ships and improving communication.

• Improve order pickup experience, leveraging technology enhancements for both customer and employee.

• Reduce broken promise rates and ship delays.

• Clear and timely communication throughout the fulfillment process.

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We will continue to enhance our customer fulfillment experience while managing ongoing industry challenges and carrier constraints.

Speed

• Increase next-day and same-day availability.

• Leverage new capabilities/ processes to improve speed, including free next-day, same-day availability, etc.

• Create unique offerings to show speed options even during times of heavy volume/backlog.

• Continue to monitor and perform favorably vs. the competition.

Flexibility

• Be prepared to quickly react to changing market conditions.

• Manage through risk scenarios (building closure, store capacity changes, carrier hubs shut down, etc.).

• Quickly adjust to customer purchasing behaviors and impact to channel mix and fulfillment sourcing.

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Volume & Capacity

• Increase capacity to improve throughput and flexibility.

• Leverage our store workforce (CFCs, FF dedicated hub labor stores, employee delivery locations).

• De-risk any building and carrier capacity challenges.

• Align product placement with fulfillment plans.

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Small Parcel Ecosystem

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Fulfillment trends.Customer shift into in-store transactions (versus last year) will reduce total SFS need. Stores will remain a major component of our fulfillment strategy, especially for our fastest offers.

RDCRDC

Xdock(EPD)

Store (3rd PartyDelivery)

Store (Employee

Delivery)

CFC/ MEC

(FedEx 1.5)

Primary Focus of Volume Secondary Focus of Volume

Store

Store(EPD,

FedEx, UPS)

Customer

• Customer fulfillment centers: Significant volume planned per CFC during Holiday

• RDC/MEC: Increased carrier capacity

• Employee delivery: Multiple plans in place to maximize EPD volume and productivity

• Same-day carriers: Reviewing free same-day category strategy and membership offers

• Fulfillment hubs: Volume slightly down per store, but across many less hubs

• Core Stores (SFS): Solutions above will reduce volume


Store Hubs

• We expect ~60% of SFS demand will flow through our hubs this year

• CFCs are forecasted to manage ~20% of our national SFS volume

• Non-CFC Hubs will supplement the CFCs for additional capacity, increased speed (especially late night), and additional weekend coverage

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Our Store Hub model continues to evolve, with a significant reduction in overall locations versus last year, while introducing new Customer Fulfillment Centers (CFCs).

CFCs

• Supports all shipments, with emphasis on next-day regional service via our FedEx middle mile program

• Large range of volume planned by location, with top stores doing 3x the volume of smaller locations

• Significant amount of throughput for holiday with substantial Thanksgiving and Cyber Week volume planned

Core Stores

• Will remain important to our overall SFS strategy

• Supporting same-day and late night next-day growth through 3rd party same-day carriers and employee delivery (where applicable)

• Providing incremental SFS capacity needed during peak Holiday timeframes

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Employee Parcel Delivery

• Projected +20% YoY growth from +400 stores primarily delivering next-day orders

• Focus on increasing packages delivered per hour and more effective labor scheduling

• Technology enhancements are in progress to improve throughput and employee/customer experience

Same-Day

• Projected +25% YoY unit growth

• 74% of customers are within the eligible delivery area

• Free same-day for select customers, as well as select categories (often larger parcel goods)

1313

Continue to grow and evolve our same-day and Employee Parcel Delivery capabilities.

Same-Day Coverage Employee Delivery Locations


Next-Day Shipping

• Free next-day shipping will continue to be the largest focus of our shipping messaging

• Over 99% of customers live in an eligible next-day delivery area

› 93% covered via late-night next-day (LNND)

• While Fulfillment Hubs & CFCs are the largest drivers of LNND shipping, all stores support next-day in some capacity

• Testing new concepts in select markets to further increase next-day volume

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Continue to increase free next-day shipping capabilities and volume.

14

= Late-night next-day coverage

= Standard next-day coverage


Fulfillment, Merchandising and Front of Store

David GarciaVice President, Omnichannel Operations


FY16• New POS

launched

• Launched SEA

FY15• Brought back

in-store Merch team

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Our Story.

FY17• New OMS

launched

• IDIL

• Order Create launched for Ship to Home and In-Store Pickup Orders

FY18• Order Create

launched for Home Delivery and InstallationOrders

• Launched Order Manage application

• Launched VMM

FY19• Started same-

day in ~230 locations

• Automated DownstockingQueue

FY20• Same-day in ~550 locations

• Started Curbside Pickup in ~30 stores

• Retired full OMS platform

• Integrated returns and exchanges: Capability integrated OMA and POS to enable the creation of a return pickup during a POS transaction.

• Contactless payments

• Lease to Own

• MC40 to TC52

FY21

FY22

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Fulfillment, Merchandising and Front of StoreFulfillment, Outlets, Product Flow, and Front of Store

91.8MUnits

Picked

42.1MUnits

Picked

23.7M Units

Picked

• Significant same-day growth

• ~940 locations ‘Open for Shopping’

• ~440 employee next-day delivery locations

• Launch CFC Fulfillment Model (~10 planned pre-Holiday)

• Membership (Totaltech)

• Mobile Self Checkout employee and customer pilots

• Manager overrides on-the-go (Leadership Engagement Tool)

• Reduction in transactions requiring manager overrides

• Automated Back Office variance tracking

• Teen Tech Center donation campaign

• Evolve from SEA to SEI

• Roll ESL to all stores

• Outlet inventory online for ISPU/Curbside

• Open-box photos (Appliances and TVs) on BBY.com

• New Outlets: Brockton, Pineville Outlet & Local Service Center; Expanded assortment in each

• Same-day expanded to ~940 locations

• Rapidly expanded curbside fulfillment due to COVID

• ~700 locations curbside only

• ~250 locations ‘Open for Shopping’

• Push into retail due to carrier constraint

• POS Thin Client: Used for Digital Sales shifts and C&D teams to transact remotely

• eGift Card/eStore Credit: Used by Digital Sales teams

• Great Call transacting

• Automatic refunding of return pickup orders

• COVID-19 enhancements and support

• Returns enabled on all store registers

• Pay by Link

• QR code returns

• 937 2PL/3PL employee integration

• Multi-transaction returns

• Automated cash management pilot

• Rolled Product Flow and Advisor Op Model to all stores

• Expanded same-day to nearly all Best Buy locations

• Outlet Op model evolves to 7 days open to shop

• Clean market testing begins (no open-box majors in Denver & Dallas core stores)


Store Fulfillment Operations

David LeederDirector, Omnichannel Operations


Staging

• Required for all pickup orders

• Ensures the product can be easily located when needed

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Order pickup enhancements.

Ready for Pickup Communication

• Trigger will move from “picked” to “staged”

• Messages will be sent when stores are open for that fulfillment

• Focus on what will happen at the store, along with critical information to prepare customers for their trip

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Problem: We don’t have a solution to locate product once it has been picked.

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In-store pickup enhancements.

• Customers waiting in line are presented with a QR code to scan.

• Scanning the code allows them to be put into the virtual line for SPU.

• Employees prep orders for customers who have clicked the ‘I’m in line’ button.

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• At the counter, the employee asks the customer if they pressed the ‘I’m in line’ button and either grabs the prepped order or locates the customer’s order.

• Process the orders as normal.

Problem: We don’t have a real-time understanding when customers are coming in for their orders.


Pickup Queue Board

• Utilize the dashboard to manage your lines in the parking lot and in-store

• Stage product for curbside runners and for SPU interactions

• Use as a solution for high volumes

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Order pickup enhancements.

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Problems: 1) Ability to “jump in and help” during high volume times was limited. 2) Our current process doesn’t allow for one employee to process more than one customer at a time.


Curbside Pickup App

21

Curbside pickup enhancements.

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TC52

• Additional 3,800 TC52s being sent to stores

› +3 devices per store, on average

• Enablement of curbside pickup on BYOD to prevent the need for searching for a TC52

Problem: We had a high volume of customers wanting curbside and it took longer to fulfill those orders.

Problem: We didn’t have enough TC52s to handle the volume.


Curbside pickup enhancements.Problem: Employees not aware of where the customer would like to have their curbside products placed within their vehicle.

Employee sees where

the customer indicated they wanted their

product.

Customer will indicate where the employee should place their order.


Open Order Report

• Lists all orders that have initiated scans for closeout (SPU and curbside)

• Orders remain listed until actioned, either changed to picked up and invoiced or removed because the customer didn’t take the product

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Order pickup operational enhancements.

Dashboards

• Lists all customers who have clicked ‘I’m Here’ when picking up

• Doesn’t require a scan of the products by employees

• Customer-initiated

• Orders remain on the dashboard until acknowledged or completed by an employee

Backroom Application

• Customer cancels or modifications of pickup products will immediately appear in the Cancel/Modified widget within the Backroom Application

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Problem: Speed of fulfillment increased the risk of closing orders correctly.

Validation

• Continue to follow all Order Pickup Prompts for ID verification

• Follow all current SOPs for leaving the store with customer product for curbside orders


Safety.

Curbside

› Always wear a vest when in the parking lot.

› Validate numbers when picking up product(s).

› Ensure cold weather supplies have been ordered.

Ship From Store

› Verify drivers arriving at the warehouse doors.

› Confirm the full order number during same-day pickup.

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Carrier enhancements.

Same-Day Delivery

• Volume has grown more in this fulfillment method than any other across the company

• Over 900 stores enabled for same-day coverage

• 3 carriers help provide support:

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Opportunity: Be more competitive and provide more same-day delivery coverage to meet the delivery options expected by customers.

Employee Parcel Delivery

• Best Buy employees delivery of packages both same-day and next-day

• Improves our overall customer coverage


Merchandising, Front of Store Operations, and Asset Protection

Aaron PylesSenior Director, Omnichannel Operations


Merchandising Holiday strategy.Provide a customer shopping experience that prioritizes safety and the flexibility to interact how they choose while creating a Customer Obsessed, Digital First, and Human Delivered environment.

27

Build on Holiday customer insights.

Integrate safe shopping learnings.

Support all category and BBY promotions.

Be flexible, agile, and solution-oriented.

Holiday Velocity

Digital Messaging

In-Store and Exterior Signage

Customer Holiday Shopping Experience


Totaltech: 10/3 Set Date

Various formats will be used at launch (still in design)

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Store signage.

Gondola toppers

Service Menu brochure at Precinct

Brochure – replacing TTS booklet

Door Cling

Stanchion sign

Digital messaging – HT, Computing, Convergence zone, ESL

St. Jude: 10/10 Set Date

Existing:

• Tear pads at POS

• Acrylic shield stickers

• Window clings

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Exterior Line Management

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Pre-Holiday signage: Oct. 17 set date.

Interior Line Management Velocity fixtures

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FY21 Feedback: Need materials in October to better support velocity merchandising and line management due to the earlier promotional activity and capacity constraints.


Holiday signage: Oct. 31 set date.

8" Floor Social Distancing Decal

Aerial

Placement throughout the store on power poles

Freestanding Promotional

Stand Placement for

deal of day

3-Sided Promotional Prism

Qty: 3 per store

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FY21 Feedback: We didn’t have enough of a Holiday feel in stores.


Digital messages.

Digital messaging will be pulsed throughout the store during Holiday to set a festive tone and promote exclusive offers, services and products.

Digital Channels

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35K Store

FY21 Feedback: There is not enough messaging for customers to bring awareness to promotions, offers and other key messages since temp signage has been significantly reduced.


Velocity merchandising & safety.

Weekly Velocity Instructions

› Identify product that will need merchandising support

› Ensure products with deep inventory are highlighted and supported

› Two SKU lists shared weekly:

• Spot buy products that do not have a home planogram location. Details on how and when to merchandise the product, including promo dates, replenishment plan, and recommended velocity solutions.

• Top forecasted fulfillment SKUs to allow for staging of product prior to sales events.

Foundationally focus on the successes of last year and enhancements to focus on the pressure points stores will experience this year.

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FY21 Feedback: Tell me more about what is coming in, when it is coming, and how to merchandise safely.


Velocity merchandising & safety.

Velocity maps are returning this year to ensure our stores are safe and organized for customers to shop.

• Continued focus on TVs, Small Appliances, and Computing zones that typically have most bulk stack needs.

• 15K, 25K and 35K stores will follow the same velocity guidance.

• Map examples for 15K, 45K, 30K, multi-level and no-track stores.

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FY21 Feedback: The provided map examples weren’t relevant for all store formats.


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POS enhancements.

Returns

• Hip printer prints return license plates

• Returns/exchanges enabled for POSA cards not activated at time of sale

Manager Overrides

• On-the-go via Leadership Engagement Tool (price overrides)

• Disabled for store leaders ringing transactions

• Disabled for no receipt returns

• Disabled for exception returns within 7 days of policy

• Disabled for no comparable SKU in GSP/Service returns

Transacting

• Gift receipts added to Customer Purchase History

• Enhanced My Best Buy Credit Card offer visibility in POS

Back Office

• Automated Back Office variance tracking (variances $0.99 or less)

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FY21 Feedback: 1) Leaders are spending too much time running to registers to complete overrides. 2) Stores need flexibility to process returns throughout the Front of Store.


OMS enhancements.

Force complete fulfilled delivery orders Previously required a BRIDGE request which increased customer service time if the order needed to be in final status before moving to the next step (e.g., returns).

More pricing informationAllows employees to understand discounts or adjustments that are made for the customer.

Updated search experiences• Provide all orders on basic search by name, phone

number, etc.

• Removed ZIP code as a required field for name search

• Updated the Advanced Order Search screen for easier use and ensure accurate results

Linked sales and return ordersMakes information easy to find and allow users to navigate back and forth between the orders.

Required reschedule reason codesProvides understanding why orders are rescheduled to help reduce them.

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FY21 Feedback: 1) Stores are spending too much time on the phone with the BRIDGE when orders need to be force completed. 2) Make searching for orders easier and tell me why reschedules happen on orders.


Register Partitions

• Sending to all stores Oct. 17.

• Use partitions between registers when spacing does not allow for physical distancing.

• Safety solution that allows for separation of employees/customers.

• Partitions can be placed throughout the store, as needed, based on existing register layouts.

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Holiday registers.

Moving Registers

• Should be a last resort, only if customer queuing cannot be done successfully with a register in its current location.

• Be strategic. Find locations that support business throughout Holiday vs. moving multiple times as this increases risk of damage.

• Must be placed on a stable, permanent surface (not on folding tables, totes or cardboard boxes).

• Must have a plexiglass shield installed and signature pad secured down.

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FY21 feedback: Enabling registers to be wireless during Holiday last year was a win and allowed for flexibility in where transactions were processed.

Wireless

• 1-10 registers set up to be wireless in all stores.

• Register numbers and quantities chosen in partnership with store and Market Ops partners.


Front end line management.

Signage and stanchions are critical

No line facilitator required

Team-driven line management

Code 1 Backup = 5 customers in any line

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Closing walks and building security

GM Inventory Health Walks are critical

Cycle counts will continue

Additional shrink cards created

FDA coverage in all stores for peak weeks

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Asset Protection.

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FY21 Feedback: We need to keep our Asset Protection tools in place and add extra elements to keep customers and employees safe.

Shrink Cards


Wrap-Up & Takeaways

Brandon CoxDirector, Territory 4 Omnichannel Operations

Torrey KingDirector, OmnichannelStore 1155, Charlotte-North Lake

Key

Behaviors

Manage a flexible and engaged workforce.

Effectively cascade and prepare your team.

Coach employees to improve customer relationships.

Execute fulfillment and the key Moments of Truth for customers.

Accelerate our membership and consultation experiences.

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2

3

4

5

Key Takeaways

Objective

Operational Execution to support Holiday Omnichannel Experiences.

Strong operational excellence will ensure your Holiday runs smoothly. Utilizing the tools, reporting and trainings available to your teams will help with all that Holiday has in store!

1. New tools and processes to support both curbsideand in-store pickup.

2. Safety is woven into the Holiday plan. Keep it top-of-mind throughout the season (and beyond).

3. Multiple merch kits will truly set the Holiday feel in stores.

operational execution to support holiday omnichannel

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