Best Buy founder seeks to stop "2.0" plan to shrink chain down to Apple's size

Posted:
in General Discussion edited January 2014
A decade after observers doubted that Apple could take on efficient big box retailers with its own retail stores, Best Buy is seeking to survive by scaling down its store sizes. Its founder thinks that plan might be fatal.

In July, Best Buy announced plans to close 50 big box stores in its global chain of more than 1,150, scale back floor space in remaining locations and slash $800 million in expenses over the next three years, while also remaking the chain to look more like Apple's stores.

The chain's interim chief executive, Mike Mikan, has called its experimental new Apple-like store "Best Buy 2.0," with a new focus on ensuring customers can speak with employees who assist them, rather than displaying as many gadgets as possible.

Best Buy
Best Buy's new "Solution Central" has been compared to Apple's Genius Bars. Photo via The Wall Street Journal.


Best Buy's founder Richard Schulze believes the company's current cost cutting plans will put it out of business, however.

According to a report by the Wall Street Journal, Schulze has floated plans to take the retailing giant private in a $10 billion buyout in order to focus on aggressively cutting prices to enable it to compete with Amazon, while also upgrading the chain's reputation for customer service to make it as attractive as Apple's own retail outlets.

Schulze's plan would reverse parts of the "Best Buy 2.0" plans, but would also reduce profit margins, resulting in a "substantial run up in costs in the first couple of years that would be difficult for a public company to justify," the report stated.

Large electronics retail chains have struggled to remain profitable, with CompUSA closing more than 90 percent of its 126 US stores in 2007 and Circuit City liquidating its last of its 155 US stores in early 2009.

Apple's smaller format of stores, coupled with a limited selection of desirable products and personalized service, have grown to 373 stores in 13 countries, 250 of which are in the US. Apple has also partnered with larger conventional retailers, including Best Buy, Target and WalMart, to develop "store within a store" locations as dedicated retail areas.
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Comments

  • Reply 1 of 57
    bigdaddypbigdaddyp Posts: 811member
    Yeah, cause remodeling and shrinking the sizes of the stores worked so well for Circuit City.

    Hears an idea. If I could get knowledgeable help that wasn't trying to hard sell me on a product I don't want because some district manager is pushing the metric of the week I might be willing to shop there.

    On their current path I think they will be following Circuit City into oblivion.
  • Reply 2 of 57
    eriamjheriamjh Posts: 1,096member


    More than likely, BB will go under regardless of what they do.

  • Reply 3 of 57
    Grandpa can you tell me the story about when people went to a store to rent DVDs or buy a computer?
  • Reply 4 of 57
    ahmlcoahmlco Posts: 432member

    Quote:

    Originally Posted by polar315 View Post



    Grandpa can you tell me the story about when people went to a store to rent DVDs or buy a computer?


     


    Next thing you know, you're going to want me to tell you about the time when all of the phones had wires. Go look it up on your iPad.

  • Reply 5 of 57
    solipsismxsolipsismx Posts: 19,566member
    eriamjh wrote: »
    More than likely, BB will go under regardless of what they do.

    Maybe they could buy Dell and RiM and make their store into an exclusive company like Apple. "We carry all the shit you don't give a **** about."
  • Reply 6 of 57
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by SolipsismX View Post

    Maybe they could buy Dell and RiM and make their store into an exclusive company like Apple. "We carry all the shit you don't give a **** about."


     


    And then Microsoft sues them for copying their store idea.

  • Reply 7 of 57
    solipsismxsolipsismx Posts: 19,566member
    And then Microsoft sues them for copying their store idea.

    If I were to buy a Win PC* and I lived close to an MS store I'd probably buy one there. They come with none of the crapware that other stores sell. Sure, I can format the drive and install a non-OEM copy, or methodically remove it all but I'd rather just buy it from the store hassle free*.



    * I recently had to drive to several stores to locate floppy disks for sale for a very unusual job I was doing. I had an external floppy drive and Win7 loaded on my MBP. But couldn't find any floppy disks.Stores still sell VHS tapes, but not floppy disks***.
    ** Save for in being Windows and some WinPC HW. :D
    *** But, hey, Apple should put them in their iMac and Mac Pro because they don't take up much space¡
  • Reply 8 of 57
    anonymouseanonymouse Posts: 6,563member
    The main problem with Best Buy is that they treat their customers like crap. Rude sales staff who can't be bothered, onerous return policies (and return lines), it's just not a pleasant experience.

    But, it will probably be tough on a lot of computer and electronics manufacturers if Best Buy does go out of business, since in some areas, there aren't a lot of alternatives, which makes it all the more surprising that they are doing so poorly. Although, the current state of the economy probably isn't helping them.
  • Reply 9 of 57
    mstonemstone Posts: 11,510member


    What other chain sells TVs? If I was in the market for a TV the first place I would go is to BB. I did buy my last big TV there. I bought the smaller TVs online.

  • Reply 10 of 57
    popnfreshpopnfresh Posts: 139member
    Schulze is about to get a quick education as to why Best Buy has been in decline for years. He's throwing his money down the drain for his ego's sake. I predict his misguided efforts will fail and BB will declare bankruptcy within 5 years.
  • Reply 11 of 57
    popnfreshpopnfresh Posts: 139member
    mstone wrote: »
    What other chain sells TVs? If I was in the market for a TV the first place I would go is to BB. I did buy my last big TV there. I bought the smaller TVs online.

    When I was in the market for a TV I went to check them out at Best Buy. Then, like most people, I bought the one I liked online and saved a bundle. And I didn't have to deal with some BB drone pressuring me to buy overpriced crappy cables or worthless "Geek Squad" support.
  • Reply 12 of 57
    solipsismxsolipsismx Posts: 19,566member
    mstone wrote: »
    What other chain sells TVs? If I was in the market for a TV the first place I would go is to BB. I did buy my last big TV there. I bought the smaller TVs online.

    I would do all that online. In fact, I know of a couple non-technical people that hate using a traditional PC but do love their iPads that have bought new HDTVs that way in the last year. I think Amazon's free shipping and consumer reviews make for a very compelling case. That's certainly where I would look first.
  • Reply 13 of 57
    tallest skiltallest skil Posts: 43,399member


    Originally Posted by mstone View Post

    What other chain sells TVs?


     


    ABC Warehouse, H.H. Gregg, Micro Center… 


     


    Speaking of seeing TV's in stores, why do Samsung TVs light up the logo on the front when they're on? It's frigging distracting, is what it is. I'll never buy another Samsung product for a variety of reasons (a boycott which started long before Android), but were I in the market for a TV, every one of them would be out of the running because of that.

  • Reply 14 of 57
    hittrj01hittrj01 Posts: 753member

    Quote:

    Originally Posted by Tallest Skil View Post


     


    ABC Warehouse, H.H. Gregg, Micro Center… 


     


    Speaking of seeing TV's in stores, why do Samsung TVs light up the logo on the front when they're on? It's frigging distracting, is what it is. I'll never buy another Samsung product for a variety of reasons (a boycott which started long before Android), but were I in the market for a TV, every one of them would be out of the running because of that.



    They're like that so they catch your eye on a sales floor. It's a setting that can be turned off. Regardless, I bought a 55" LG a number of months back and have been extremely satisfied with it. LG makes very solid products. I just wish there was a good American TV maker (and don't give me Vizio, with their TV's made from recycled parts)

  • Reply 15 of 57


    Store size is irrelevant, when you have clueless staff & the worst customer experience in the business.


     


    Ask Radio Shack.

  • Reply 16 of 57
    daylove22daylove22 Posts: 215member

    Quote:

    Originally Posted by mstone View Post


    What other chain sells TVs? If I was in the market for a TV the first place I would go is to BB. I did buy my last big TV there. I bought the smaller TVs online.



    Fry's

  • Reply 17 of 57
    aross99aross99 Posts: 87member


    Why not let us place our order online, and then pick it up at the store?


     


    I know Circuit City did that right before the end, but it seems like this might be a reason for me to shop there.


     


    We all hate their sales people, and it takes a while to find exactly what you want sometimes.


     


    I know that wouldn't work for everyone, but I would certainly like to pick out a few items online, and place an order instead of having to search all over the store, and explain my choices to the sales people if I need to ask them...

  • Reply 18 of 57
    solipsismxsolipsismx Posts: 19,566member
    aross99 wrote: »
    Why not let us place our order online, and then pick it up at the store?

    I know Circuit City did that right before the end, but it seems like this might be a reason for me to shop there.

    That might be the issue. If you are comfortable with buying it online then why not have it delivered for free instead of then going to the store, picking it up yourself, and bringing it home. Unless there is an urgency it just doesn't seem like a great plan. On top of that, the amount of product you can hold in a Circuit City store if you didn't have retail space would be immense which means that Amazon wins in their efficiency. Then there is rent for CC store over wherever in BFE Amazon puts their warehouses. There seems to be too many cons and not enough pros to make that work when your retail business has already dropped past the point of sustainability.
  • Reply 19 of 57
    4fx4fx Posts: 258member


    Best Buy was always where I turned to for things I don't want to wait on for delivery. But I've had many occasions where they are simply out of stock of what I want now. Now, I tend to go to Target first for things like games and movies and if they don't have it head to BB. But if BB is out of stock, there's no way I'm going to wait for them to get it in. They've lost my business to Amazon on many occasions, not due to price (I'm willing to pay a bit extra to have it now in some circumstances), but because they can't seem to keep their inventory stocked properly.

  • Reply 20 of 57
    4fx4fx Posts: 258member

    Quote:

    Originally Posted by hittrj01 View Post


    They're like that so they catch your eye on a sales floor. It's a setting that can be turned off. Regardless, I bought a 55" LG a number of months back and have been extremely satisfied with it. LG makes very solid products. I just wish there was a good American TV maker (and don't give me Vizio, with their TV's made from recycled parts)



    Pioneer makes great TVs, but unfortunately they tend to be a bit pricey. AFAIK, they are the only viable American option.

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