Best Buy – Last of the Dinosaurs

I have long held the belief that too many companies are run by bean counters – pardon me: financial experts is what I meant – rather than by managers with marketing and people skills. Best Buy is kind enough to serve as further proof of my theory. While holiday sales weren’t bad at all for many retailers, Best Buy saw sales decline by more than 1% in December, compared to the year before. While that doesn’t sound like much it should be noted that Best Buy holds a quasi monopoly on the electronics retail market in the United States, being the last chain standing after the demise of CompUSA (how many even remember them?) and Circuit City. Sales might have been better but it seems like inventory mismanagement lead to quite a few ruined holidays for people holding confirmed online orders.

Larry Downes, contributing author to Forbes Online, made out two important reasons for this effect in his recent article:

1. Unacceptable customer service quality and practices and
2. The fact that people use Best Buy as a show room to check out items they then buy online from somebody else.

A large number of commentators to his article seem to confirm this, and I myself whole-heartily agree, at least with the service issues. Before my inner marketing eye I can see a Best Buy CEO in his office of dark wood, ivy league diploma and golf memorabilia on the walls, pondering his next steps after watching his competition implode. I remember avoiding CompUSA whenever I could because I despised being harassed for additional insurances or service contracts; I quite liked Circuit City but their portfolio was a bit narrow, and they often didn’t have what I needed. With these guys out of the way, what does the CEO’s trusty marketing handbook (located right next to “The Art of War” on the oak shelf) say? It says: in a monopoly situation, milk the hell out of your business!.

So he did, and it shows: staff tends to scatter when approached by customers and is generally not very knowledgeable on the items available. There is a lengthy process to hand over more expensive items to customers after they already committed to buying them (they are all locked up, and few people have a key), prompting me once to leave without the iPod I wanted because I got fed up. And on top of it there is the old harassment scheme again to offer insurances and service plans to people who have already said they don’t want them.

The demise of CompUSA would have shown anyone with a heart for customers and marketing that these practices are a sure way to destroying one’s business. So how about stopping it, and how about redeploying the freed up resources to serve their customers better than ever before? How about offering an incentive plan inviting customers to actually buy the products they just checked out instead of buying them from Amazon back home?

It’s not hard, really, to survive when you are a monopolist. A lot of people still want to touch and feel the things they buy for a lot of money. It’s not hard to get them to buy from you unless you run a perfectly good market position into the ground so bad that customers settle for alternatives. “Best Buy” is a promise. And it isn’t kept. Which is why you lost me.

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