Best Buy CEO Brian Dunn Resigns After $1.7 Billion Loss 513
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.
Best place for electronics???? (Score:5, Insightful)
Why can't people in rural or semi-rural parts of the US just use Amazon like everyone else in the US?
We don't do wired networking! (Score:2, Insightful)
I went in looking for an ethernet card (pretty basic, right?) and the salesdroid informed me they hadn't stocked "wired networking stuff (sniff!) since October" and the manager standing right there just went "yup" and didn't seem to think it was a problem.
I went across the street to Staples to get the same card as the BB website for $9 cheaper.
The future of brick-and-mortar (Score:2, Insightful)
Re:Customer Service (Score:4, Insightful)
Only sales people that I've had trouble with past that generally are car salesmen, who've even tried the technique of blocking the exit driveway with staff so I couldn't drive off. I saw their block, and raised them a 4x4 through the hedge row. Shoulda seen the looks on their faces...
+1 awesomeness. I have little sympathy for dealerships with staff that pull tricks to prevent you from leaving.
Re:Customer Service (Score:4, Insightful)
Re:So... (Score:5, Insightful)
Just because he dedicated his career to working his way up a greasy pole doesn't mean he's worth millions of dollars. The corporate world is full of sharp-elbowed ladder-climbers who don't really do anything other than angle for promotions and line their own pockets.
Re:So... (Score:5, Insightful)
"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."
As Yoda says, "that is why you fail". The fact is, there's almost no middle anymore. Bottom of the barrel electronics have gotten good enough that low end buyer buy almost exclusively on price. High end buyers have the awareness and ability to comparison shop online for yet a wider selection at better prices. Best Buy loses the first group to Wal-Mart, and the second to the internet. And the in-between isn't big enough to make any money on.
Re:BestBuy, why I hate you. (Score:5, Insightful)
No one is happy to be in a BestBuy.
From first hand research, kids absolutely love best buy because its full of dvds and video games. I have no idea how to leverage this into adulthood... maybe sell pr0n dvds and adult toys (although I don't want the legendarily pushy salesguys rambling on about how Monster AA batteries give better vibrations)? Also the next generation of "steam" "red box" and "netflix" users are going to devastate them even with the kids. When the majority of kids think Barney comes from netflix instead of best buy, they're toast.
Maybe if they were an adult toy store... not XXX rated like a /.er would assume but something like pay a buck or two to get in, and play all you want with brand new electronics, nothing in packages, play all you want until you get tired, and then QR codes freaking everywhere to order items online from amazon, maybe a kickback affiliate percentage... Heck there's no reason Best Buy has to do this, an enterprising /.er could do it today...
Re:Customer Service (Score:2, Insightful)
Of course not because it didn't happen.
Sorry to see it go, our freedom (Score:5, Insightful)
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.
Re:Haven't had bad luck lately... (Score:5, Insightful)
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.
Re:Customer Service (Score:2, Insightful)
They have to sell add-ons on a certain percentage of everything, that's how they are evaluated for performance. They are evaluated such that pushiness = good. Serving people the way they want to be served = bad ratings.
Comment removed (Score:5, Insightful)
Re:Haven't had bad luck lately... (Score:5, Insightful)
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.
Re:Haven't had bad luck lately... (Score:5, Insightful)
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.
Re:Customer Service (Score:5, Insightful)
This all sounds exactly like what was going down at Circuit City before they went under.
Re:Over priced and bad selection (Score:4, Insightful)
In my more entrepreneurial moments I've been thinking of setting up a GC exchange corporation where people could trade cards they don't want for a modest fee say 1% off the top. My wife for example would enjoy trading cash for your GC, assuming that store isn't the fat chick mall store (don't recall name sry).
Too bad your idea has already been done, and it works quite well: see plastic jungle [plasticjungle.com].
Re:Haven't had bad luck lately... (Score:5, Insightful)
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.
Let's not forget the role of Reaganomics (Score:2, Insightful)
America has spent the last few decades transferring massive amounts of wealth from the middle class to the wealthy. The middle class is shrinking, the ranks of the poor are growing, and we have reached the point where half of Americans are living on twice the poverty level or less. Many large corporations such as Best Buy have spent a lot of money to bring this about, and now that the middle class is shriveling, there are fewer customers with sufficient disposable income to purchase thousand dollar televisions.
This is hardly the only reason Best Buy is in trouble. It is but one of many. But many of those large corporations who have worked so hard to screw over the middle class are dependent upon the middle class having enough disposable income to buy their products, and now the chickens are coming home to roost.
Re:Haven't had bad luck lately... (Score:4, Insightful)
Amazon doesn't have any problem offering their "Amazon basics" cables which are very reasonable.
I'm guessing Amazon doesn't have people making these cables, and that they are contract manufactured in China like every other cable is.
Re:Haven't had bad luck lately... (Score:5, Insightful)
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).
Re:Customer Service (Score:4, Insightful)
At which point, all negotiations should have stopped. Personally, I would have picked up the phone and asked information for the number to the local police department. If the sales force continued their abusive tactics, I would have hit 911 and told the 911 operator I was being held hostage against my will. Because that's EXACTLY what they did to you.