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Jeff O’Heir, Editor in Chief of Dealerscope, has covered consumer electronics and information technology issues for more than 15 years. Prior to that, he wrote about crime, politics, boxing and the arts for daily newspapers.

Time For Best Buy To Tap An Outsider


Independent dealers love to bash Best Buy, taking a certain amount of pleasure each time it stumbles. Who doesn't like to see one of their main competitors take a whack every now and then? But few of them, if any, want to see the CE giant fail.

Richard Glikes, executive director of the buying group Azione, summed up many of the reasons in a recent editorial.

"Custom retailers and integrators should rue the day that [Best Buy's demise] would happen. We cannot deliver the volume necessary to keep specialty suppliers in business. The outcome would be the manufacturing of more commodity products, less consumer awareness of new technologies and gear, and the strengthening of our true moral enemy, Amazon. We have learned to coexist with Best Buy/Magnolia. They complement our deficiencies and at the same time allow ample opportunities due to their endemic shortcomings."

Glikes's suggestions on how Best Buy can improve are nothing new, but several of them are worth repeating. They are similar to the steps that some of the best independent CE retailers have already implemented (or wish they could) and that others should follow:

1. Adopt a smaller footprint.
2. Personalize the client experience.
3. Focus on strengths.
4. Insist on proprietary models and model numbers.
5. Concentrate on profitable categories and drop all the others.
6. Develop deeper vendor programs based on mutual support.
7. Selection is death. Cut your vendor list in half.
8. Pay commission to selected personnel in profitable selling spaces.
9. Be the leader.

The last suggestion is probably the most pertinent. With former CEO Brian Dunn gone, Best Buy now has the opportunity to tap a leader with fresh insights, visionary thoughts and innovative ideas. (Too bad Apple's former retail guru Ron Johnson is busy at J.C. Penney. Now that would be an exciting choice.)

Dunn may have been a good CEO before his fall, but he was a 28-year veteran of the company. It's difficult for anyone who has been enmeshed in a company for so long to come up with the disruptive strategies that are needed for immediate change. And change is what Best Buy (and many CE retailers and manufacturers) needs.

A recent article in the Minnesota Star Tribune about Best Buy cutting back on its use of stock options shows just how important that change is.

"Best Buy has long portrayed itself as a fast-growing high-tech firm vs. a mature chain of brick-and-mortar stores. So stock options, which normally encourage executives to take big risks to boost the stock price, would seem like the right compensation tool," reporter Thomas Lee wrote. "Best Buy, however, has become a large, bureaucratic company that shies away from risk and change, former executives say.

"Executives [there] have 'grown up in a culture where there is not a lot of outside people to change [orthodox] thinking,' Scott Rollin, founder and president of Management Compensation Resources consulting firm, said in the article.

It looks like the time's right for Best Buy to bring in that outsider.

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