The CEO of Best Buy spoke about the beating the retailer has received from critics. "You have to be thin-skinned," Brian Dunn said at the Consumer Electronics Show in Las Vegas this week. Negative feedback is "a gift. It's a gift you don't always care to open but it's a gift," he said.
Best Buy "stands for choice," and the store offers more variety than brick-and-mortar competitors, particularly big-box all-in-one retailers who have to be more selective about the electronics they offer, according to a report by Chris Moran on The Consumerist.
"We think of ourselves as a showroom for our vendors," he explained, adding that the other side of that is that he is now competing with many of those same manufacturers, like Apple and HP, who both have built successful businesses dealing directly to consumers.
To combat that, Dunn says that more customers are looking to Best Buy as the place to add onto or trick out the items they might buy elsewhere. "Customers are coming in to buy things that interact with things they already own," he explains.
Best Buy is coming off a holiday fiasco, after it cancelled orders days before Christmas because it received a bigger-than-expected response to seasonal sales. Dunn said the "silver lining" of that experience is that online shoppers are starting to see Best Buy as an e-commerce option, and not just a place to window shop before buying online elsewhere.
He shrugged off reports that called Best Buy's bricks and mortar stores anchors around the company's neck, instead calling them a "huge advantage," as they allow the company to continue to cater to customers who want to see the product before they buy.
But Best Buy plans to shrink the square footage of many retail locations, while others will expand to serve growing demand.
Dunn's public comments come about a week after a blistering analysis by Forbes's Larry Downes, who predicts the retailer is gradually going out of business. Despite the disappearance of competitors including Circuit City, Best Buy is losing market share, and its stock lost 40 percent of its value in 2011. Downes also details Best Buy's unpleasant customer service, and failure to integrate its Website into brick-and-mortar operations.
Dunn seems to be whistling past the graveyard here, positioning liabilities as strengths. In the coming retail apocalypse, real-world stores will be anchors drowning unsuccessful brick-and-mortar retailers. Successful brick-and-mortar retailers will make their stores convenient and enjoyable to shop in, while their salespeople offer knowledgable, prompt, and helpful customer service. Best Buy does none of these things. The fact that its stores are "showrooms" for vendors is a huge liability for Best Buy. Likewise, big-box retailers like Costco offer less variety of electronic merchandise, but greater convenience -- consumers can pick up a TV in the same place they buy toilet paper.
And there was no "silver lining" to the canceled Christmas orders. It was an unmitigated fiasco.
I stand with Forbes on this one. Best Buy is going down.
By the way, about Dunn's comment that you need to be "thin-skinned." I think Dunn meant "thick-skinned" -- "thin-skinned" means quick to take offense.
The CMO Site is an executive social network that provides CMOs and other marketing executives from the world’s leading organizations with a real-time, online venue where they can convene to discuss how they're delivering on the most critical marketing priorities. Join us!
kicheko - So i'm wondering how come we seem to be moving back to shop owners preffering physical visits, expanding stores for more people....sure they can expand a bit, but should they not be more concerned with strengthening the online channel?
I think a lot of it has to do with company politics. In the end, people are always more concerned with their own jobs than the company bottom line. The vast majority of people in a retailer are dedicated to the brick-and-mortar operation; if the brick-and-mortar operation contracts, these people have to get new skills or new jobs.
Mitch, - Back when online shopping started out, it was the trend for stores to try and minimise physical visits to their shops, instead focusing on online orders and then delivering. At some point i thought that except for food stores, some merchants were eventually going to phase out the physical store completely.
So i'm wondering how come we seem to be moving back to shop owners preffering physical visits, expanding stores for more people....sure they can expand a bit, but should they not be more concerned with strengthening the online channel?
I totally agree that shopping is a social experience for many. It's kind of like the hunters of old. Going out into the retail forest, hunting for goods and bringing them home for the family. <insert Tim Allen grunt here>
For now, at least, I seriously don't mind being in self-help mode which is what the web offers me. However, there are times when hunting in the wild is appealing. And fun!
AliceAMM - I think many of these discussions of the future of retail lose sight of the fact that shopping is a social and recreational activity for many people.
Hypothesis for the moment: in the new world of e- and mixed- but hardly any purely-storefront marketing, the most responsive system wins. (And there's a speed factor in responsiveness; "the answers are a, b, c, and yes, right away, here it is" beats the pants off "We can order that for you, and here's a website where you can look up the answers to your questions." Amazon beats brick and mortar because there's actually more info available on their typical website than from a typical salescritter, assuming you can catch one; full response in less time.
If so, then one thing a company in trouble can't be is resistant to bad news. We've all seen what "too big to fail" means in reality -- "too big to fail quietly or slowly." Overreaction is potentially expensive too, but just now I think Best Buy would be better off overreacting to their situation than underreacting.
Karl, I think that Best Buy has an opportunity to succeed. Although some of this success is tied to effectively merging a strong online presence with their brick-and-mortar outlets, there is a part of the success linked to the nature of how people shop. For many commodity type items, you may purchase exclusively online--the risk is low and the low prices are very attractive. For bigger ticket items, however, I still believe many like to see and touch these items. Or, it may be a case where a customer needs some consultation. Best Buy, therefore, is positioned well, I believe, to capitalize on this. The key to true success, however, will be a great online experience seamlessly married to its brick-and-mortar presence--not an esy task.
The proliferation of smartphones and tablet devices presents new opportunities and challenges for marketers to reach customers where they are and when they’re ready to buy. Apps, the mobile Web, social check-ins, geofencing, and mobile ad standards are among the tools marketers need to master in this new world. Learn how to use new mobile technology effectively and avoid its hazards.LEARN MORE
The CMO University offers executive marketers an entirely new way to get the education they need to forumlate next-generation marketing strategies.Join interactive classes | Earn credits | Chat with peersView archived courses on these hot topics:
To save this item to your list of favorite The CMO Site content so you can find it later in your Profile page, click the "Save It" button next to the item.
If you found this interesting or useful, please use the links to the services below to share it with other readers. You will need a free account with each service to share an item via that service.
How the carmaker uses metrics and analytics to track all the proliferating information streams it has on customers, from social media, real life, and more.
Craig Dado, senior vice president of marketing for the Del Mar Thoroughbred Club, describes how the racetrack uses social and mobile marketing to attract a younger, female demographic.
As the US Postal Service prepares to curtail mail delivery, marketers relying on first class will have to plan more carefully and, over time, move into other channels.
Is a massive, three-day industry event featuring A-list speakers like Bill Clinton and Malcolm Gladwell the right approach for a company seeking to generate awareness of its brand? Steve thinks that goes part of the way, but if brands want their names to stick they need to build communities.
CMOs rely on aggregate data for customer preferences and are missing the opportunity to get one-on-one information through social media and other resources, according to a study of 1,734 CMOs conducted by IBM. Watch a Webinar presenting the findings, and get a copy of the report for yourself.
"Moneyball," the new Brad Pitt baseball movie, is one every marketer should see. It's not just about relying on metrics and analytics over gut feelings, it's also about relying on the right metrics and analytics.
Tweet This