Its CEO left, and you would think that most of Best Buy's (NYSE: BBY ) stores had burned to the ground -- at least based on all funeral marches that were cued yesterday morning.
I am currently bearish on Best Buy's performance, and a lot needs to change for it to survive, but the departure of CEO Brian Dunn is not the final straw. Liquidation sales are not right around the corner. Everybody just needs to take a deep breath and wait to see who the new CEO might be. Then we can happily jump back on the anti-Best Buy wagon and merrily ride down the trail to obsolescence.
Why all the hostility?
I think everyone can agree that Best Buy's recent failures have been primarily because of the rise of Amazon.com (Nasdaq: AMZN ) , with Best Buy becoming the place where consumers go play with the latest electronics before purchasing them online at Amazon. Best Buy truly failed to embrace the online model; simply having a website where one can make purchases does not an e-tailer make. If a retail store cannot convert visitors into customers, it might as well close the doors to save on the rent payments.
The workforce at Best Buy hasn't helped. Instead of the helpful Geniuses found at an Apple store, you are left with mostly apathetic employees who know the bare minimum about the products they sell. There was a time when Best Buy's employees were knowledgeable of products, and top performers were rewarded with pay often not found in retail. However, in the name of cost-saving, this system has been replaced by one that pays a lower hourly rate and offers incentives for selling add-ons like the notorious buyback protection plan at checkout.
Change from outside would be better
Regardless of the reasons for his departure, it may have truly been time for CEO Brian Dunn to leave the company. He has worked for the company for 28 years in various capacities, but some fresh thinking from outside the Best Buy family may be essential to the company's survival. Transitions from within have worked for other companies recently, including Tim Cook taking the reins at Apple and Craig Jelinek taking over for James Sinegal at Costco. The obvious difference is that while both of those companies were thriving at the time of the transition, Best Buy finds itself in the opposite situation.
After years of trying to avoid the fate of former competitor Circuit City, it may be time for Best Buy to try something new. It took a step in the right direction when it hired Stephen Gillett as chief information officer. In his previous work at Starbucks (Nasdaq: SBUX ) , Gillett revolutionized mobile payments for the coffee chain and developed a host of engaging smartphone apps for Starbucks customers. While these two things alone won't help Best Buy compete directly with Amazon, the company is looking to leverage Gillett's expertise to build a digital relationship with customers.
The ultimate coup for Best Buy in its search for a new CEO would be to find someone like Ron Johnson, the recently hired CEO of J.C. Penney (NYSE: JCP ) . After developing retail stores for Apple with great success, Johnson was brought in to work the same magic with the lagging retailer that is J.C. Penney. With Best Buy focusing future growth on smaller, mobile-focused locations, expertise like Johnson's could be put to good use at Best Buy as well. Unfortunately, I don't see Johnson jumping to Best Buy after only five months at Penney's, but stranger things have happened in the world of CEO moves.
Wait and see what happens
I doubt that interim CEO Mike Mikan or the board at Best Buy will be looking my direction when it comes to plotting their next course of action, but I am not alone in thinking that it's time for one of my favorite retailers to find some new blood to run the company. While a retail superstar like Ron Johnson may not be available, there may be someone out there who could help revamp the retail store while Stephen Gillett makes the online presence stronger.
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