Best Buy, the darling of the retail electronics industry for the better part of the last two decades, is in trouble. It’s suffering from the growing “showrooming” trend, whereby shoppers visit retail stores to feel, touch and compare products only to price and purchase them online. That has made the stocking and staffing of big box stores like Best Buy big drains on profitability. Alas, the only thing constant is change.
Enter Richard Schulze, founder and still 20 percent owner of Best Buy, who is hoping to team up with private equity firms to buy the company back and return it to solid footing. He doesn’t approve of the current plan to downsize the chain, and he has a point. It’s hard to argue that any organization can cut its way to success.
Still, according to a report in The Wall Street Journal, Schulze’s plan involves—buckle your seat belt—“cutting prices to better compete against Amazon.com, Inc. and other online retailers while ensuring that the in-store customer-service experience is as good as Apple…”.
Cut prices and improve service. Apparently that’s all there is to it.
It’s understandable that the justifiably proud founder of an iconic company would want to rescue it from the fate that befell giants like Blockbuster and Circuit City, and in so doing would believe that anything is possible if…we…just…try…harder. But we’re talking BIG money investors here who would have to come up with some $3 billion to fund the deal, and a sophisticated board of directors that would have to approve it. The fact that they’re seriously considering a plan like this is mysterious, at best.
This is what happens when decisions are made by Wall Street criteria rather than those of Madison Avenue, Infinite Loop or Sand Hill Road. I’ve got no brief against financiers who in many ways make the world go ‘round, but when disruptive innovation causes a masterpiece brand to fade and crack, the solution must be based on vision and imagination, not a wing and a prayer. You can’t fix it painting by the numbers.
image credit: bestbuy
Steve McKee is a BusinessWeek.com columnist, marketing consultant, and author of “When Growth Stalls: How it Happens, Why You’re Stuck, and What To Do About It.” Learn more about him at www.WhenGrowthStalls.com and at https://twitter.com/stevemckee.