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Best Buy CEO Brian Dunn Resigns After $1.7 Billion Loss
An anonymous reader writes "Best Buy CEO Brian Dunn has resigned amid the big-box retailer's major financial problems. The announcement comes two weeks after Best Buy announced a $1.7 billion loss for its fiscal fourth quarter. Best Buy is trying to avoid the same fate as Circuit City, which went out of business in 2009, but the future looks grim." The article provides a reason not to trust middle-management: the company claims it had "no disagreements with Dunn about operations, financial controls, policies or procedures." Best Buy may not be Shangri La, but in many rural and semi-rural parts of the U.S., it's the nearest and best place to actually find a wide selection of electronics.
Their customer service is bad. Their sales clerks are trained to be pushy. Their prices are just so-so.
No big surprise.
How much of a bonus does he get for leaving?
Just curious.
If it weren't for online retailers, Best Buy would be my only choice for computer hardware other than a few small vendors (which cost even more than Best Buy). Thank the silicon gods for NewEgg and Tiger Direct.
Why can't people in rural or semi-rural parts of the US just use Amazon like everyone else in the US?
I'm not sure I'm spoken to a Best Buy employee once without them lying to me. My most recent purchase was a new 3D TV. I made the purchase at Best Buy because they had the lowest price, despite how much I normally despise that store. The employee was insisting that I needed to buy high-end HDMI cables as well (despite the fact that digital cables don't have signal degradation in the way that analog cables can) and he insisted I needed a new 3D BluRay player. I told him I had a PS3 and he was adamant that PS3's couldn't play 3D BluRays, so I had to buy a new one. I pointed to his demo unit which was using a PS3 to play 3D BluRays.
I also know people who have worked at Best Buy in the past who admitted it is official company policy to lie to customers. They are trained to claim to own whatever item a customer is looking at, so they can recommend it.
Given Best Buy's business practices, frankly I expect them to fail over time.
Small electronics sales will likely move to Amazon, and people will just buy TVs and large items elsewhere (department stores, Walmart, Target, etc).
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You say "The article provides a reason not to trust middle-management".
I don't think you know what middle management means. Sure, this is a reason not to trust corporate PR, but I think it should kind of go without saying that you should never trust corporate PR, as regardless of the truth of the situation, it is their JOB to say things that are "best" for the company.
And yet Fry's Electronics is still going strong, has a great selection, and is really the only big box electronics store I'll go into.
Yes, they have a small army working the floor, just like BB, but unlike BB they aren't obnoxious or constantly harassing you*.
Here's what BB should do: Look at what Fry's is doing, and DO THAT!
*I understand from previous /. stories that this behavior is mostly the fault of the management, so apologies to the conscientious BB employees.
If thou see a fair woman pay court to her, for thus thou wilt obtain love
Your boss must really hate you.
1. Your employees are jerks. I hate talking to them, they are not people friendly. Every time I go to BestBuy, I cannot count the number of times where an employee follows me all around the store and asks what I think about whatever it is that I'm currently looking at. I wouldn't mind that so much but then when I finally find whatever it is that I came for, no one is within a 100 mile radius of me?! WTF?!
2. My ears hurt after leaving your store. I think it might be the employee that is trying to sell dude over there a new 346" HDTV that has said HDTV set to where the volume has to rival any 747 that might also want to take off in your store. Literally I travel to BestBuy with earplugs.
3. Your prices suck. That is all there is to that.
4. I feel bad for coming to your store. I hate to keep beating on the employee gong, but when I go to the local BestBuy, employees look so soulless and that in turn makes me feel bad for coming to your store in the first place. No one is happy to be in a BestBuy. I can't put my finger on it exactly but it just seems so, loud, dull, and annoying at BestBuy.
5. I miss CompuUSA and for some reason or another, I always go into BestBuy looking for computer parts first, until I realize, oh yeah the selection is pathetic at best. Of course, people say that I could just jump on the Internet and ask them to ship whatever to the store, but if I get on the Internet, I'm not surfing over to BestBuy.
6. Yeah that whole Amazon.com and them not collecting sales tax, yeah that's a big problem for BestBuy. I have no idea how they get away with it but I've seen lot of friends head to BestBuy to look at the product, yank out phone, and order the exact same thing from Amazon. They like it because it is usually free shipping and by paying no sales tax, they usually save about $5.00 to $20.00. (Local sales tax being 10%)
I've got no idea how BestBuy can turn the tide, but it sucks to walk into a BestBuy. It's not a very happy experience.
Unfortunately, this seems to be the way things are going. There will be one or two "retailers" left on the Internet which will be in unassailable positions because of heavy discounting on freight and committments from suppliers. Buying anything locally will be an option fondly remembered by grandparents and a concept utterly foreign to the next generation.
Why will there be only two? Well, Amazon ships with UPS and UPS charges them so little based on volume that they can make money offering free 2-day shipping. Should some new player come along they aren't going to get discounts like that until they have a huge volume, which means their prices will be higher, meaning they aren't going to get that huge volume. Same thing with suppliers: if you buy 1,000 TVs from Samsung they give you a different price than if you buy 100. If you sell 1000 a week you are going to be buying a huge number - maybe more like 10,000 at a time - and get such a better price that they new start-up can't ever get that good a price.
So what do we have now? A monopoly. Mostly driven by the Internet and the way shipping works in the US. Best Buy had their own fleet of truck for distribution so their costs were quite different than using UPS or FedEx. The idea that some new startup can come along - as Best Buy did - is pretty much gone. The market is closed to new entrants. Would there be room for two such distributors? Maybe not - we might end up with only Amazon as the big retailer in the US and WalMart for low-end stuff. We can all see that the small independent seller is doomed if they haven't already closed up shop now. WalMart put those folks out of business a long time ago.
You can certainly say that Best Buy failed in providing customer service, but we are seeing a passing of a lifestyle. We are also seeing an interesting phenomenon whereby more and more things in people's daily lives are being supplied through a single source. Did you know there is only one factory in the US making glass bottles? If one can do it, why have more, right? Except it is a single point of failure and there are many substances that a glass bottle is required for. If that one factory has a fire or some other accident the entire US is without glass bottles for perhaps a very long time. With retailers being eliminated we are focusing more and more on online retailers and two shipping companies - of which there will only be one in the end. When it is only Amazon and FedEx (far more diversified then UPS and therefore the more likely one to survive), what happens if there is a strike against FedEx? Well, it means people stop getting stuff. When it is WalMart and Amazon alone and everyone is getting food, clothes and everything else through these channels what does it mean?
One big thing it means is that if the buyer at WalMart doesn't like some supplier, their stuff isn't getting sold in the US. It means decisions that consumers get to make today are then made by the buyers for the retailers that are left. If the buyer doesn't choose it, the consumer can't choose it. Period.
Oh, you think "the long tail" will solve this problem. Not really. There will be only a few retailers because the dynamics of an online store are quite different from opening a little shop on Main Street. It is already pretty much impossible for an upstart to compete with Amazon today and it isn't going to get any better. Which means if Amazon doesn't strike a deal with a supplier - on Amazon's terms - their stuff doesn't get sold. Manufacturers are ill-suited to sell things directly, so that isn't really an option. Neither is Amazon going to take on a new product that completes with an existing high-volume product unless they get a really good deal - why trade dollars for pennies? This puts Amazon in control of what brands of toothpase you get to choose from - you will not have the option of going to a different store.
Pretty sad, isn't it. At least it isn't the government making these decisions for us.
My problem with Best Buy is that it's such a painful experience to shop there.
The last time I was in the store, I was there on release day to buy a Kindle Fire. The saleskid made two strong attempts to persuade me to buy $200 beats headphones, like the ones he was wearing around the store, to compliment my $200 tablet. Then of course you have to contend with the hard sell on the warranty and any number of other add-ons. And heaven help you if you're buying a large electronic device, especially if you aren't all that tech savy. They sent my parents out of the store with $200 of tack on Monster nonsense. Basically, taking advantage of old people.
Best Buy needs to make their shopping experience not akin to a trip to the dentist. Stop with the aggressive push for add-ons. Stop with the gun to the head warranty pushes. (You can buy an extended warranty on a CD, did you know that?) Work on customer service. Fire the disinterested teenagers. Reward knowledgeable stales staff. Develop knowledgeable sales staff.
Basically, stop being what most people think Best Buy is. Start being what Amazon is - an easy, convenient, stress-free shopping experience.
Put some tablets, digital cameras, appliances, and televisions on a display floor and then make the money off of cell phones, cables, and media like flash drives and memory cards.
They would be best served by having a limited selection of the big floor space hogs and rotating inventory fairly regularly.
So you're saying follow the radio shack business model? Its worked wonders for them... Get rid of the crap, that people only come in for once a decade, and sell the stuff with real profit! Here's the problem. The non-profitable stuff is the only reason people went into the store. The profitable stuff is more an impulse buy than a reason to come in. So Radio Shack gave up their draw to maximize shelf space for high margin stuff, but in the process drove away 90% of their customer base. Permanently. They will never get those customers back. No matter what they do, they are basically toast. When people realize they cant get what they need at BB, they wont go there. The other day I went looking for an HDMI cable (3 foot). I know a little about consumer electronics, so I know that digital cables dont need to be fancy to work perfect. That being said, an HDMI cable should run about $10. So, being in a hurry I went to BB. Sure enough, they had HDMI cables, tons of them. The cheapest was $75. WTF I said, so I figured Walmart. If ever there was a place to shop when quality doesn't matter... Walmart: $53! WTF I said, so I figured Radio Shack. What the hell I said, I haven't been in one in a decade, maybe they wised up a bit. RadioShack: $95! Finally I decided I didn't need one that bad and ordered online from Cables to Go: $11 including shipping. Had it in my hands less than 30 hours later. These people have given up the draw, and they wonder why their profits are plummeting.
-=Geoskd
I wish I had a good sig, but all the good ones are copyrighted
Best Buy needs to make their shopping experience not akin to a trip to the dentist. Stop with the aggressive push for add-ons. Stop with the gun to the head warranty pushes ... Fire the disinterested teenagers. Reward knowledgeable stales staff ... Start being what Amazon is - an easy, convenient, stress-free shopping experience.
Not to defend Best Buy here, but these things are not necessarily compatible with cheap prices in a big-box physical retail environment. For example, all the stores I visit with cheap prices try to upsell the high-margin junk so they can make money. All the stores I shop that have knowledgeable sales people and good customer service - think Nordstrom's - aren't cheap. Amazon has cheap prices and no pushy come-ons but they also don't have to pay for retail space and sales employees. It seems that you can have physical stores, good customer experience or cheap prices but not all three.
"95% of all Slashdot
If you aren't willing to pay decent (commissioned) sales staff, why have a sales staff at all?
Why not just be like Target, and have few or no salespeople? It's not like the staff at Best Buy are helpful or knowledgeable, they are one of the primary reasons people avoid the store.
Since people are already using brick and mortar stores as showrooms to try before buying online, maybe that's what BB needs to embrace in order to survive. Stop holding vast inventory, trade in big stores for smaller spaces that focus on social events centered around technology, and affiliate themselves with online merchants rather than fight them to their inevitable death. Imagine a place where you get to experience the future high tech house/bar/coffee shop/office. It's slicker than an Apple store, and everything you touch is a product you can buy. Snap a barcode with your phone and you're taken to a BB site where you can post your reaction/experience to facebook along with a link to buy (with BB taking commission). Couple hundred clicks/likes and you get a discount to any of their authorized affiliates.
*inb4 crappy 5 minute ideas get ripped apart :)
your thin skin doesn't make me a troll
Tell their execs to go to an Apple store and ask themselves why many people like going there. The experience of dealing with store employees does not feel like I've walked onto a used car lot with a sales guy waiting to eat my lunch.
Best Buy is strictly non-commissioned. I worked there for a year when I was in high school at a store opening, and they made sure that the first thing we said to shoppers, with exuberant pride, was "Just so you know, everybody at Best Buy is not working on commission so we're only going to sell you what you need and never what you don't!". What we didn't say, which is actually the truth, is "... but we do need to give you the hard sell on product service plans (fancy words for extended warranties) or we'll get fired, and that guy hovering over there is our manager who is only listening to how well we can sell one to you". If you worked in the home theater department (I was in PC home/office), add high margin cabling to that.
Those of us who weren't naive knew we were being screwed. The only reward for pushing these products was job security and it's all so we could emphatically tell customers a lie: that we wouldn't try to sell them things they don't need.
This was 13 years ago, too... back when Best Buy was a much better place. I'm sure it's only gotten worse in recent years.
The problem isn't that they aren't commissioned, it's that you can't fire anyone. A buddy of mine was a "turn-around" guy for another retailer. He got hired by BB a couple years ago. Problem is you can't turn around the stores because you're not allowed to fire the weak and the lame from the store. If anything the number of poor sales people actually inflates because those who are good at sales eventually move on with their career. All management can do is move the chairs around on the titanic.
If you worked in the home theater department (I was in PC home/office), add high margin cabling to that.
And here is why I don't shop at Best Buy. It's not that the sales people were trying to sell me a high end cable. It is the fact that there is no HDMI cables in the entire store for less than $30. Sorry, but I will not spend $30 on any cable, for anything, ever! I don't need gold plated HDMI cables for my less than 40 inch TV.
There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
Although I've never worked for Best Buy, I've known people that did, and you are correct - non-commissioned and trained to try to sell high margin products with the discount products, and that has been consistent for years.
But trouble has been brewing for a while - CD and DVD sales moving to streaming or download, games for PC and recently consoles moving to the same, a lack of high cost, high margin PC computers (nothing over about $800 except Apples) has to hurt (for instance, nothing like Alienware), extremely expensive computer components for PC customizers, etc. The stores that branched out into music gear probably moved in the right direction, but all of the ones I know of that did built their stores next door to a Guitar Center, which is a stick-the-pistol-in-your-mouth-and-pull-it kind of move because Guitar Center has a high customer loyalty. Best Buy still can compete - when I bought my TV, it was the same price at Best Buy as it was on New Egg, and if people need installation (which I didn't), it is a perfect place for a profit. Same with installing car stereos, starters and such, and appliances, phones, cameras (though they lack high cost, high margin), and music players still seem to be a core business, so I imagine they are very profitable.
Really, Best Buy needs to refocus, and maybe even go upscale - competing against Walmart and the Internet is a lose-lose prospect, but Alienware has ridiculous margins for Dell, and Best Buy could easily create a premium brand computer with similar specs and sell it for less by licensing from, say, ASUS. There is a reason I buy computers at Microcenter (or online, and by computer I mean laptops because I buy computers as boxes of parts) and not Best Buy - they actually sell high end graphics at reasonably close to other online retailer prices (and who doesn't want it that day?). The only premium thing I've ever seen at Best Buy was phones (and overpriced phone cases - they want $35 for something I can get online for $5 - and I'm not shitting you - 7x markup, same exact product manufacturer and component #).
I have found the best place to buy HDMI cables when you need one right away - Ross Dress For Less or TJ Maxx. Those stores all have an electronics section and they usually have a few random 6ft HDMI cables priced at around $10 (decent quality too). Sure, that's not as good as many of the online deals, but it's the best I've found for local and cheap. Fry's has some deals as well...
One of the primary reasons that Best Buy tries to push their extended warranties so hard is because the margin on PC sales are extremely slim. The stores barely make a profit at all off of the sale of a computer, now more than ever. The only decent profit margins are on the higher end gaming computers, or Apple.
When I worked at Best Buy ('99), it was during the emergence of the "e-Machine". If you don't remember those, they were ultra cheap computers ($300 - $700 at a time when the average desktop price was still around $1k). They packed the computers with adware and useless garbage in order to sell at a low price. They also usually had an underpowered processor (usually a Pentium Celeron). We, employees, were told that the store didn't make any money on these computers, so selling add-ons (warranties, MSN subscriptions) were vital. I actually believe them on this point. The problem is, nobody wants to pay a few hundred dollars for a warranty on a $300 computer.
To compound problems, a good slice of our customer base was parents and grandmothers who only want to casually browse the Internet and occasionally e-mail their children/grandchildren. It's nearly impossible to tell these people that they should spend $900 instead of the $300 and be able to sleep at night with a good conscience. So, we found ourselves in a position where we'd sell the cheaper computers with a near impossible warranty attachment rate.
It's even worse these days. You can easily find a great computer for under $500 (without the adware) that will satisfy nearly all consumers needs. The PC gamer enthusiast already builds his own PC's or knows where to buy them online, and does. As the profit margins on computers shrinks even more, the need to attach add-ons increases. Balancing that with customer satisfaction quickly becomes an impossible task. I do agree, though, that it would be smart for Best Buy to offer premium brand computers though it's simply not what most retail consumers are looking for (I think they mostly do "built to order" kiosks for those... at least, they used to).