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Tech|1/08/2012 @ 2:03AM |33,205 views
Best Buy CEO Brian Dunn Responds To Forbes.com Article
22 comments, 9 called-out + Comment now + Comment now Move up Move down  Why Best Buy is Going out of Business...Gradually  Larry Downes Contributor
Over the last few days, an unreal number of people have read a highly skeptical post about Best Buy written by Forbes contributor Larry Downes. The highly articulate, well-reasoned piece, headlined “Why Best Buy Is Going Out of Business….Gradually,” was an indictment of the way the electronics retailer does business. Wasting no time, Downes goes for the jugular in the first paragraph:

““Electronics retailer Best Buy is headed for the exits.  I can’t say when exactly, but my guess is that it’s only a matter of time, maybe a few more years.”

The piece has received 2.3 million page views since it was posted on January 2. The post has triggered 927 comments, and has been tweeted more than 16,000 times. In short, Larry Downes hit a nerve.

Indeed, even Best Buy CEO Brian Dunn seemed to have read it.

Dunn has now posted what appears to be a direct response to the Downes piece, though he he never mentions Downes or Forbes by name.

I would encourage you to read the original piece, but also to read Dunn’s response, which I have re-posted here in its entirety:

“Best Buy has been taking some criticism lately. As CEO, I know that criticism goes with the job, and I’m well aware we have some challenges. I also know that errors we make often translate into a poor experience for our customers, and that is simply unacceptable.

Still, while I agree with some of the commentary on areas we need to improve, I feel it’s important to set the record straight on statements about our company that are, in my opinion, not completely grounded in fact. And I feel the need to do so, in part, to make sure our 180,000 hard-working employees understand the whole story – and have the full context that allows them to develop their own opinion about what’s written and said about Best Buy.

Let’s start with a couple of examples where I think the critics got it right.

The cancellation of some internet orders just before Christmas was our fault, and it’s not representative of how we EVER want to treat our customers. I’ll spare you the technical explanation of how and why it happened, but we know we did not deliver a good experience and we’re truly sorry. We’ve worked to make amends with customers whose holidays were made less happy because of our mistake, and we’re working diligently to make sure it doesn’t happen again.

Another area where we have received fair criticism is the overall speed of the transformation of our business model – something we are working hard to address. We’ve accelerated changes to key elements of our model already (the significant expansion in the number of products available on Bestbuy.com and the launch of our online Marketplace are two recent examples), but we need to move even faster, particularly in creating a more seamless experience between our stores, web sites, call centers and services teams. We recognize people can and do shop from anywhere, and they expect thoughtful, helpful interactions from us every step of the way. We continue to invest in a number of areas – from employee training, to critical system enhancements – to ensure our customers always receive the kind of experience they deserve and expect from us, wherever and whenever they choose. But, simply put, that work needs to happen faster – and we’re taking significant steps to accelerate the pace.

Now, onto a couple of topics where I disagree with the critics.

First, some believe the internet has made physical retailing (i.e., stores) irrelevant. There’s no doubt that the internet, and the mobile web in particular, have changed the way people shop, but there is strong evidence that consumers continue to value the experience of shopping in stores. A recent study by the NPD Group, a leading market research company, notes that nearly 80% of consumer electronics revenue still moves through physical stores. Additionally, approximately 40% of customer purchases made through Bestbuy.com are picked up in one of our stores. And the truth is, traffic in our physical stores increased in our third quarter and has been trending positively for most of the year.

Finally, there are those who question the validity of Best Buy’s business model. This misguided perspective is especially troubling for me, because it blatantly and recklessly ignores overwhelming evidence to the contrary. Best Buy is a financially strong and profitable company that has generated more than $2.6 billion in cash flows from operating activities in the first three quarters of the fiscal year. We also delivered positive operating income in each of the first three quarters of fiscal 2012. We grew total market share in the third quarter according to the most recent public data available. We have closed down certain operations that were not profitable, which we expect to have a positive impact on our earnings going forward. And we are focusing the company on areas where we see the greatest opportunities for growth and profit: mobile devices and connection plans; enhanced digital and e-commerce strategies; growth in our services business; and expansion of our established business in China.

As I mentioned earlier, we fully expect to receive our share of criticism – we’re a big company and we don’t always get everything right. But this is one of those times when I felt it was necessary not only to acknowledge our shortcomings, but to set the record straight on issues where facts are being obscured by rhetoric.

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   kse33 1 month ago
I dont care what the CEO says. Best Buy is still the worst. Just recently I wanted to buy a tablet, I goto best buy and they tell me they are out but offer to order me one. I ask when it will get there and they tell me a week. I say no thanks I will go look online and the guy seemed offended. I go home and start looking online and their website although beta says they have it in stock, I check the next morning, still says its in stock. I was near the best buy later that day and decided to stop in to ask if it really was in stock. Only two employees on the floor, one helping someone buy a computer for over 15 minutes, the other walks buy me a few times, and ignores me but was helping other customers. I notice a few more customers waiting for help. Another customer asks me if I am waiting and I said yes, that caught the one sales persons attention doing the computer sale and he asked for help over his radio, help arrived but instead of going to all the people waiting, new help found some old couple that just walked in. At this point fed up, most of the people waiting including myself leave very unhappy. I drive to Office Depot, walk in, spot an employee, he asks if he can help, I spot my tablet on an endcap right in front of me, I ask if they have any in stock, he radios for help, less than 60 seconds later help arrives, he goes to the back and brings the tablet out. 3 minutes later its purchased. Roughly 5 minutes total in store. I hate to say it, I have always liked looking around best buy but they are the worst, if for some reason I cant wait for an item to be shipped from an online retailer I will be bypassing best buy from now on.

Permalink Flag Reply  jacki36243 1 month ago
On Best Buy CEO Comments. While you addressed your perception of profitability and acknowledged your shortcomings in product availability over holiday, you have not once touched on the customer experience. This is the key element of your success or demise. The experience is terrible and is getting worse by the moment. From the teams of so called “experts” who hang out talking amongst themselves to the lack of cashiers and long lines at check out to the “customer service” and I use the term loosely – who are incredibly unfocussed when it comes to customer satisfaction.

Online retailers are cleaning your clock – which is pitiful since they neither have a physical presence of personnel or store front.

You would be well served to review the online experience in some of your competitors – Amazon – J&R – as well as non competitors – Zappos – to figure out what an online experience should look like.

As for your instore experience – fire whomever is responsible for your customer experience and start over…..its awful. Across the board – I have shopped from new york to miami and the only “consistent” is how bad it is.

The model – whatever it is – is not working.

Permalink Flag Reply  morjoie 1 month ago
I totally agree with your assessment. I remember when Best Buy started its national expansion. At that time the poster child for “poor customer service” was Circuit City. Where Circuit City’s employees came off as inept, disparaging, dismissive or, sometimes, downright rude, Best Buy’s employees seemed to be engaged, helpful, knowledgeable, etc. Amazingly enough, there was a time, a long time ago (in a galaxy far, far away) when shopping at Best But was actually a pleasure. Those days are long gone, unfortunately. The response of Brian Dunn to the excellent article by Larry Downes shows that the days of excellent customer service are not about to return anytime soon.

Permalink Flag Reply  morjoie 1 month ago
So Brian Dunn was moved to respond to Larry Downes’ well-reasoned, articulate analysis of the woes of Best Buy! Unfortunately, his response was not especially illuminating.

It’s too bad he didn’t take the time to really address what was at the heart of the criticism in the original article. As is usually the case in these situtations, what Mr. Dunn said is not nearly as interesting as what he did not say.

As jacki36243 stated, the criticisms about customer service, of which the Christmas ordering debacle was only a part, were not effectively addressed at all. When I go into a Best Buy, I see employees milling around, many having personal conversations. So many don’t really seem interested in helping customers. I feel like I’m playing the lottery if I have a question. Maybe I’ll get someone who is actually knowledgeable, but most likely, probably not. If I buy something, I hate being pestered to buy some sort of extended service contract. I really hate having my personal information put into the Best Buy database if I have to return a defective product.

I was not affected by the Best Buy Christmas catastrophe, but it exemplifies the company’s uninspired approach to customer service. This, along with their incessant upselling of extended contracts, and the intrusive collection of personal information, (ostensibly to “track” but more likely, to discourage returns) have combined to create a chilling effect on my relationship with that store.

Now, Best Buy is no longer my go-to place for electronics. It’s become more of a last resort. Although I dislike ordering electronics online, I will do that before buying from Best Buy, too. It’s too bad, because while Brian Dunn is applauding his company’s “business model,” his stores will likely continue to bleed customers like me.

Permalink Flag Reply  quantumsignature 1 month ago
The health of your business ALWAYS relates back to the quality of your people. No exceptions.
It amazes me how few Larger businesses get this.
Perhaps its too many corporate meeting and that mind set. There is certainly a disconnect between “corporate” and the customer level of service.
Exceptions would be : Apple, Google and many other progressive companies that stay in touch with their employees and customers.

Permalink Flag Reply  bernie3020 1 month ago
In reply to Best Buy going out of business Larry Downesk! I can’t help but think they are in financial trouble because I have waited since Dec. 26 2011 for a $137.00 credit to my charge card & it still hasn’t appeared. I’ve made 3 calls now to no avail. If they run their credit agency like this when it only takes 30secs to do with a mouse then they deserve to disappear!
An avid reader of forbes. Bernie

Permalink Flag Reply  artemis537 1 month ago
I’m sorry Bernie but your post does not make sense. Best Buy along with any other retailer does not have their own “credit agency.” Like any credit card you get it’s through a bank, in your case it should be through HSBC. If BB has processed a credit back to your card and it hasn’t posted it’s an issue with HSBC not Best Buy. Calling best buy over and over is not going to get you any progress, try calling the bank.

Called-out comment Permalink Flag Reply  djvanderhoeven 1 month ago
Mr. Savitz- well done on highlighting the quality of Mr. Downes’ article. I hope to read more of similar quality from him (his follow-up article today is very good).

Best Buy has a serious problem, and they are getting tons of free advice from Forbes readers. I don’t know if they’re ignoring it. I understand not wanting to publically insult your store-level staff, but something needs to be done.

Its like this: You used to actually have knowledgeable, friendly, and useful store employees on the sales floor. You now have a pack of blood-sucking sales vultures (many of whom apparently despise you as much as your customers do). It is clear to anyone who walks into a BB store (and comments from employees back this up), that their training and compensation enforce the sales vulture mindset. This is a customer-losing strategy.

Best Buy and Mr. Dunn- consider this an offer- contact me, and I’ll gladly help you turn this around.

You need to be honest with your customers about how bad your in-store employees are. The vast majority of them need to be re-trained, and the compensation structure radically changed. This needs to be accompanied by a marketing campaign that admits you were doing a poor job at the in store experience. (much like what Domino’s pizza has done in the past two years). This will be difficult because your current campaign is a completely false claim to having great customer service. It’s going to be a bitter pill, but you’re going to have to say “We’ve been doing it wrong, we’re sorry, we’ll fix it.”

Probably many of your store and regional managers need to be re-trained or fired, as do all the people who are married to the up-sell, sales vulture strategy. Look through your company’s past, find out who was pushing for this strategy, and get them out of your company- they are killing it.

Permalink Flag Reply  susan29102012 1 month ago
Best Buy’s customer service needs improvement, as does the customer service for most retailers these days. However I also disagree that physical stores will go the way of the dinosaur. Case in point: A Best Buy employee at one of their Boca Raton, FL stores helped me to find a cordless phone with a certain feature I needed. The info online didn’t specify whether that feature was present. Although online merchandise information is improving it still doesn’t beat seeing something up close and personal before you buy.

Permalink Flag Reply  djvanderhoeven 1 month ago
Totally Agree- it isn’t being “brick and mortar” that is the problem. As several have identified, they are still a juggernaut and have a lot of potential advantages…if they can figure out how to use them.

Permalink Flag Reply  talan123 1 month ago
“We also delivered positive operating income in each of the first three quarters of fiscal 2012.”

Whoa! Apparently Best Buy can see the future and why we need all those extended warranty plans!

Called-out comment Permalink Flag Reply  neckcess 1 month ago
just to make it clear, Best Buy as well as many other retailers has been in financial year 2012 since March of last year. So Brian Dunn is NOT forecasting the future but instead speaking of the results of the current year. And for full disclosure, YES I am a Best Buy employee trying to set the record straight at least on this one point.

Called-out comment Permalink Flag Reply  aaron1985 1 month ago
Brian Dunn’s response was completely inept. No one care’s about how much cash flow BB has received past quarter, etc. He still danced around the Christmas day issue. There’s almost a thousand comments on the first article, most negative. Think about how much lost revenue lies within just a thousand angry non-customers?

Best Buy has so much to offer, but it all gets miserably lost in their “model”. I actually currently work at Best Buy and I can tell you the motto is “no customer goes unserved” but that literally means “no customer goes out without getting harrassed to open a credit card”. I’m not joking. That is what is pushed, and I mean hard: Geek Squad Warranties and credit cards.

Management has transitioned from staff support to staff control. All reinforcement is negative. It’s all about the up-sell and the gimmicks. We try and instill fear in people that “their electronics will be hit by lightning”..etc. Not only do they need a bigger, more expensive product, but they need to pay for Best Buy to deliver it, install it, and “protect” it.

This is all over the place I know. I can just sum up and say that I completely agree with the article on Forbes it’s spot on, and Best Buy has 2 options: adapt or die. They’re currently choosing the latter. I make a non-commissioned 8.75 hourly wage. I’ll be fine.

Called-out comment Permalink Flag Reply  mrgeek619 1 month ago
I am with you Aaron1985.. I myself work for Best Buy and it’s changed in a way that I don’t know if it can be fixed. Management is constantly talking about getting credit apps and “offering the best solution” which to non-best buy people mean to push as hard as you can for a broadband card, credit card, Geeksquad services, and accessories.
Our store and other stores in our district are VERY understaffed and to be honest, while I like the employees as people they are idiots. They don’t know much about their product and constantly running to Geek Squad or the computer to look up more information regarding it.
This new model they rolled out just does not work, staff morale is at an all-time low and customer service is horrid.

Called-out comment Permalink Flag Reply  reddev19 1 month ago
I agree with both of you. I worked for bby for nearly four years before leaving in August to get a job with my degree. Best decision ever. At the time I left we had a turnover of at least 50% and not a soul cared about it. It seemed like management was happy to force out the longtime knowledgeable associates in favor of lower-paid, less qualified zombies.
I play on xbox live with one of my good friends who still works there and he says it’s a nightmare. Apparently it’s all about credit cards now. Pushing them on every customer and if he doesn’t, he gets reprimanded.
If there’s one advantage bby had, it’s real-life help in real time. Unfortunately, the higher-ups would rather just find zombies willing to harass people into getting protection plans and credit cards instead of actually helping them out.
I feel really bad for my friend and the well-intentioned people who need the money, but have to deal with that garbage from management every day.

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After a long career at Barron's, I joined Forbes as San Francisco bureau chief in December 2010. I've been writing about technology and investing for more than 25 years. With the Tech Trade, I'll pick up where I left off when I was writing the Tech Trader Daily blog at Barrons.com. When I'm not working, you can find me riding my road bike around the Bay Area hills, managing my fantasy baseball team, rooting for my beloved Phillies and Eagles and hanging out in the Valley with my family.

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