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Best Buy’s Troubles Are Self Inflicted

04/23/2012

Best Buy’s current challenges are messy and being played out in full public view.

With the advantage of hindsight it’s easy to point to problems within the company. The opportunity for Best Buy lies in what they do to address and counter those problems.

Let’s take a look at some of the key issues facing Best Buy today.

Uniqueness – Best Buy’s fundamental problem is that there is virtually nothing you can buy at Best Buy stores that isn’t cheaper or more convenient to buy online (I first made this statement in my April 17th post). The drive to “own” a niche or product line is what drove Amazon to create and market the Kindle. Same for Barnes & Noble’s Nook. If a retailer only sells what the competition sells that retailer can only distinguish itself by price or by service.

Uniqueness Solution – While I wouldn’t recommend that Best Buy simply jump into the tablet game, it is imperative the company looks ahead and fast-tracks the launch of a proprietary product or technology pronto.

Emphasis On Stores – Most retailers got caught flat-footed by the economic nightmare beginning in late 2008. To counter the down trend many retailers, such as Target, Walmart and others, made investments in online merchandising and marketing. Amazon, already in that space, seized the opportunity to distance itself from traditional retail. Even today the Best Buy site is plain vanilla and somewhat boring.

Emphasis On Stores Solution – Best Buy owns a lot of big box real estate. There’s no easy fix there. Clearly the need to test everything from Best Buy vending machines (have you seen the Red Box video dispensers, like the one pictured above, in McDonald’s?), to kiosks, to pop-up stores, to micro stores and whatever else they can come up with needs to be tested, measured and evaluated – also pronto.

Emphasis On Stores Solution Part II – Get serious about omni-channel retailing. Best Buy, just as Apple does, should embody the technology they sell. Innovation must come from every angle in new, engaging ways to heighten, streamline and simplify the shopping experience.

There are likely other opportunities laying in the weeds as well. The company’s board, acting CEO and execs must know they are on a very real burning platform. Having lost $1.7 billion last quarter, Best Buy could find itself in serious hurt real fast. It doesn’t have to end badly but it does require change – pronto.

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