Unlike luxury consumer goods brands such as Cartier or Louis Vuitton, Best Buy needs to appeal to a very wide swath of society. Consumer spending patterns since the pandemic, especially the growing gap in spending power in the U.S. between the most affluent and the least, have the CEO of an electronics mass retailer worried.
“We’re seeing some dispersion between the high income earners and the low income earners,” Corie Barry told the Fortune Most Powerful Women summit on Tuesday in Washington, D.C. “If I just level up, that is probably what keeps me up at night.”
Barry, CEO since 2019, stated that approximately 60% of the gross domestic product depends on the spending of the most affluent segment of U.S. society, double the percentage it was before the COVID pandemic. “It makes it feel like there’s really resiliency in the overall market, that’s an issue, because your lower-income consumers are really struggling,” she continued. Those struggles include credit delinquencies and difficulty navigating inflation and high housing costs.
“Anytime the entire economy is heavily reliant on a small, narrow population of people. That is not good for the long-term health of the economy,” said Barry, whose company took in revenue of $43.5 billion last year.
The solution for Best Buy has been to offer a wider assortment of more affordable items, allowing consumers to continue shopping there. “How can we make sure we have something that will cater to you so that the answer isn’t, no, I can’t afford anything?” said Barry.
Impact of tariffs
Of course, procuring that broader assortment has been made much more difficult by the tariffs imposed on many countries by the Trump administration since April. With less than 10% of the world’s electronics being manufactured in the United States, Best Buy is particularly vulnerable among retailers to the ongoing tariff wars. Barry said that at the start of the year, about 55% of the goods Best Buy sells came from China, and that now that percentage is about 35%, with Mexico and the U.S. picking up a greater share.
One thing Barry says she learned from the COVID crisis was to be upfront with employees, who now number 85,000, about the impact of such significant events beyond their control. Notably, executives must ensure that there is not a constant state of alarm, all while remaining vigilant and responsive to the required changes in how to operate the business.
“They can’t be worried every day about the ups and downs of geopolitical policy,” Barry said. At the same time, executives should be transparent with the troops. “Our people deserve to understand why we’re making the decisions we are, and we are incredibly transparent.”
