Best Buy goes on offensive to return to CE dominance

Best Buy has been in the news a lot lately, with the scandal involving former CEO Brian Dunn and subsequent resignation of founder and chairman Richard Shulze on top of a fiscal year that saw the company’s GAAP loss widen to $3.36 cents per share and comparable-store sales slip 1.7%.

Understanding that an image overhaul was needed, Best Buy’s leadership went on the offensive at its annual shareholders’ meeting Thursday, ensuring attendees that the company would once again become the leader in consumer electronics and services.

While Best Buy’s earnings and comps were disappointing, interim CEO Mike Mikan noted that during the year the company reported adjusted revenue of $50.7 billion, and that its share of the U.S. CE market grew, especially in such categories as mobile phones and tablets.

Still, Mikan acknowledged that the year was far from perfect and that the company’s “operating performance was well below (its) full potential.”

But Mikan wasn’t there to talk about the past. His focus was on the future and how Best Buy could right its wrongs and create a better customer experience. He spoke on how his new role as interim CEO has enabled him to better understand how things operate from the ground up and what changes needed to be made.

“Since taking the job, I’ve spent a lot of time listening and learning, from the point of view as a manager. I’ve visited Best Buy stores across the country. I’ve chatted with a lot of agents. I’ve listened to a lot of sales associates and Geek Squad agents, and I’ve watched them in action.”

Mikan highlighted the following ways Best Buy would be able to regain position in the marketplace:

  • Become more relevant, more intelligent and more nimble

  • Connect with customers in a deeper way and better understand their needs

  • Become a trusted advisor who solves problems, anticipates needs and meet them with a seamless multi-channel experience

  • Demonstrate renewed commitment to efficiency and productivity

  • Expand services offering, playing to advantage during slow product innovation cycles

  • Invest in employees with more training and better tools to maximize what they can offer to customers

Mikan addressed the two issues that continue to affect the company’s ability to gain market share, show-rooming and growing competition from

In regards to show-rooming, or the customer practice of checking out the merchandise at retail stores and then buying them for less online, Mikan said that the best way to reverse that practice would be by “improving the customer experience, delivering the best price, and strengthening (the company’s) technology.”

In regards to, Mikan said, “Fair to say they are a competitor, but they are also a partner. No question that Amazon has a formidable technology platform. We’ve made every effort to be very competitive with it. We think that obviously there’s been a level playing field issue with their tax advantage status, we don’t think it is a tax issue as much as it is a fairness issue … We think we can compete on price, know we can compete better on service, because we know we have the service offerings and we know we have the technology experts.”

While Best Buy’s initiatives were all very promising, shareholders no doubt wanted to know how the company could improve its bottom line and increase its value. In that respect, Mikan assured them that the company would be less capital intensive and concentrate on improving returns and delivering cash to investors.

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- 3:13 PM
dlcuster says

As a female consumer Best Buy's problem is the lack of knowledge as to who the customer is. On more that one occasion and in more that one store I have waited over 20 minutes for a Best Buy employee to acknowledge that I was looking for something and usually I had to go looking for them. When asking a question they answer like I bothered them. My son said one that the Best Buy employee treated me like he did. Big mistake. But I feel he is on to something, in that the Best Buy employees feel that women are like their mothers and don't know anything about electronics. One day, I watched a woman try to buy an IPAD. She knew what she wanted but the Best Buy employee was not listening to her. He asked her several questions in an attempt to, it seemed to me to talk her out of the IPAD,before she asked was he going to get her the IPAD from the case or not. At no time did he offer to show her the IPAD's features or discuss a case or any accessories. He got it and after she walked away, he said to another Best Buy employee in a loud voice. "What a waste of an IPAD. She has more money than sense." Exactly, women of a certain age have a large disposable income and they are in your store to spend it. If you treated them with a modicum of respect and interest they may spend more and tell there friends about it. Unlike men, women care if their friends have a positive experience so if they have one, they will in turn let others know. On the flipside if the experience is negative they will let that be known as well. From what I have learned talking to people, the problem with Best Buy is not a female issue as much as a gender issue. Boomer men feel the same way about Best Buy as women. We can and do shop elsewhere and we don't mind going several places if we are treated well.

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