Worst of all worlds for Best Buy
Even if big-box consumer electronics retailers could conjure up the CEO of their dreams, times have changed.
Another top retail exec gets the heave-ho -- this time at Best Buy -- and the company says all the right things in a dutiful statement pledging "new leadership" to spur growth and profitability.
Good as far as it went and I'm sure the search committee will try its hardest to land a solid replacement. But even if they combined the DNA from the best retail execs of this -- or any generation -- to conjure up a dream CEO, Best Buy would still need a miracle to avoid the fate suffered by the likes of Good Guys, Circuit City, and CompUSA, let alone return to its go-go days. The problem is less anything that Best Buy did or didn't do than the fact that times have changed and there's no going back.
The days when giant computer specialty store chains like Businessland, Inacomp, and Entre dominated the landscape are long gone. As much as anything, they fell victim to a shift in customer buying preferences. The old-time retailers never really figured out how to respond when manufacturers like Dell and Gateway started selling directly to the public.
It was game over when e-commerce got going in earnest -- Amazon being the exemplar -- and the Internet was the better option when it came to price and choice.
Then Apple broke every rule in the retail book and demonstrated how company-owned stores operating in high-rent urban districts could run circles around garden-variety consumer electronics outlets by emphasizing superior customer service and expert familiarity with highly coveted product lines. With all due respect to Best Buy and the others, their conception of "solution selling" seemingly boiled down to pushing whatever flavor happened to be the spiff of the month, rather than offering meaningful service its customers. No surprise there. Retailers deal with thin margins and there's added pressure on the large box stores that are forced to move inventory they pay for each month or eat big losses.
Earlier this year,where, among other things, he voiced the same worry:
I think 2012 is the year that retail -- retail stores -- really starts to feel the pressure. And I don't say that because I don't like retail stores. I loved going to Borders. I thought it was a great consumer experience. And I was a huge fan of Tower Records. But the economic pressure is huge as e-commerce gets more and more viable and as these category killers emerge in the superverticals. If I own mall real estate or retail stores in cities, or if I own chains like electronics chains, I'd be concerned.... I think electronics and clothes are going to be a real pressure point....
None of this means retail is necessarily doomed as far as consumer electronics goes. In fact, the accelerating demise of the mega-stores may help secure the near-term prospects of retailers with smaller footprints, especially those that sell lots of high-margin accoutrements and don't push their salespeople to nudge customers to buy today because who knows how much longer the sale will last. Who knows -- maybe it will spark a back-to-the-future moment where customer service again takes center stage. Hell, I'd pay extra to see that.