Brian Dunn Resignation and Fierce Competition From Amazon Brings Change to Best Buy
Brian Dunn, CEO of Best Buy Co., Inc, resigned abruptly Tuesday. The announcement, suspected to be related to a company probe into his “personal conduct” brings more unwelcome attention to the retail giant. Over the past few months, Best Buy has received harsh criticism of it's business model in leading business journals, including Forbes. With a $1.7 billion quarterly loss announced on March 29, the big box store strategy appears to be failing. Best Buy Co., Inc however, claims the financial troubles are not to blame for Dunn's resignation. In fact, the board of directors plans to follow Dunn's new business strategy for the coming fiscal year. As a current employee of Best Buy, I want to offer some insight on that plan, both good and bad.
The key to any successful business is to innovate and stay ahead of the times. Best Buy is a company that to this point has successfully done new things. The genius behind Best Buy in the 1980s was the “grab and go” big box retail style. Set in a warehouse-like store, Best Buy mastered the art of the demo. Bring people in the store, show them the products, and let them walk out with one. As an employee, I constantly rely on the demo to make customers feel comfortable with their purchase. In fact, I've had numerous customers tell me they've seen products elsewhere, but wanted to come to Best Buy to physically see it before buying. The “elsewhere” most often refers to Amazon.com, Best Buy's leading competitor. Unfortunately, this new generation of online shopping puts Best Buy's strategy at a disadvantage. Many of my customers come to our store for the demo, but when it comes time to buy, many customers choose Amazon.com. The company usually offers lower prices because they do not need to pay store operating costs. In essence, Best Buy has become the showroom for Amazon.
Best Buy's plan to stay relevant in consumer electronics has the potential to work. The idea is to provide the customer with the complete solution. Rather than just providing the core product with necessary accessories, such as a TV and cables, Best Buy now offers services through the Geek Squad, content such as Netflix and Hulu, partner connections for internet, cable, and satellite, also enticing financing and rewards options available on everything make it easy and affordable to get everything you might need. Also, the Best Buy Mobile branch (the only part of the company that is MAKING money) will be expanded to include more locations.
As a Best Buy salesperson, I constantly find the value in things and present that value to the customer. So as I see it, the value of Best Buy is in it's showroom. Nothing will replace the spectacle of music pumping stereos, the wall of huge crystal clear TVs, or the line of super thin laptops and tablets waiting to be tried out. Also, the financing and services provided are benefits Amazon does not, and cannot, offer. The opinion of a salesperson and various service options keep customers coming back. While Best Buy may be falling behind the online generation, fulfilling the business strategy with what they excel at will maintain the company's success.