Dear Best Buy: I Feel Like I Don't Even Know You Anymore
Dear Best Buy (NYS: BBY) :
We used to be so close, but I feel like I don't know you anymore. There's word on the street that you're trying to become something I don't even recognize, and for what? To die a slower death in a dying market?
The big-box electronics concept that made you famous is dying, we all get that, and you're trying to find a new path in the business. But your plans to move toward rewards for employees (commissions) and smaller store formats are misguided, and we've already seen them fail.
I used to despise Circuit City, which lacked your airy stores. Circuit City sales staff was pushy, trying to make commissions off anything it could get me to buy. Now you're following in their failed footsteps offering an "enhanced compensation plan that introduces financial incentives for delivering on customer service and business goals."
You used to make RadioShack's (NYS: RSH) tiny stores look like mall relics. Now you want to build small stores specializing in mobile devices? Isn't that what RadioShack does with razor-thin profit margins?
Why are you following in the footsteps of failed concepts in electronics?
I'm not just here to question your decisions. I'm here to help. I drive by your shiny new headquarters just a few miles from my house and think of the neighbors, friends, and family you would let down if you fail. So here's what you need to do.
Sometimes the market changes and with Amazon.com (NAS: AMZN) , Wal-Mart (NYS: WMT) , and Target (NYS: TGT) taking over your position in electronics, it's time to move on. Accept it. I'm not going to Best Buy to get a DVD when I can stop by Target and pick up milk and a loaf of bread as well.
You need to understand that service is your competitive advantage. Computers, home theater systems, car stereos -- the things we need help installing should be your bread and butter. And look into some new markets, please. I've suggested solar before. How about electric-car chargers? Who are consumers supposed to go to for installation of these electronic things? It could be you.
Don't fight the trend
Shoppers are moving online, and customers are looking for one-stop shopping when they go out. Don't fight it; offer something we can't do ourselves.
Amazon can't service its products, Target can't fix an iPhone, and Wal-Mart doesn't have electricians who will go to your home to install products. You could be the Apple fix-it shop, instead of the other shops that are popping up around the country. Smash your screen? Stop by Best Buy. Need a new battery installed? Best Buy has it. You already have a great launchpad with your Geek Squad, but it needs to be built out more and become a true core part of the business. With Apple selling 3 million new iPads in their opening weekend alone and continuing their march to dominance, there will no doubt be a plethora of out-of-contract damaged products to repair.
The retail electronics business is dying a slow death, and you need a way out. Providing us with services that others can't is a way to stay relevant and keep some of those big, shiny stores open.
I'm rooting for you
The road will be long, but I hope you survive. The stock market doesn't have a lot of respect for you, but if you think outside the box, I think you can make it. Don't worry. You're not in this alone. Other retailers are getting crushed by the push to online shopping. You can brush up on what's going on and even pick up a few tricks from those companies doing things right in our report: "The Death of Wal-Mart: The Real Cash Kings Changing the Face of Retail." Click here to learn more now.
At the time this article was published Fool contributor Travis Hoium manages an account that owns shares of Apple. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.The Motley Fool owns shares of Wal-Mart Stores and Apple. Motley Fool newsletter services have recommended buying shares of Wal-Mart Stores, Apple, and Amazon.com. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Motley Fool newsletter services have recommended creating a diagonal call position in Wal-Mart Stores. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
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