Best Buy’s Last Hope: A Radical Reversal On Customer Service And CredibilityWritten by Evan Schuman
With Best Buy in between CEOs at the moment, many have taken to either writing Best Buy’s obituary (move over CircuitCity, your kid brother’s coming) or predicting that it will turn itself around with price cuts to fight Amazon.
Whether Best Buy has a long-term future in retail is an open question, but it certainly won’t get there with a price war against a well-resourced E-tail giant. Our unsolicited advice: Best Buy has one shot—an expensive, painful, highly disruptive shot—to truly turn itself around. It must embrace customer service in-store to an extent that would make Nordstrom, Trader Joe’s and Whole Foods blush. That means store associates who are true experts in the electronics they are selling. In short, it means beating Amazon not with price cuts—which would only reinforce a cheap quality reputation while gutting already thin margins—but by delivering the type of buying advice and pleasant environment that Amazon can’t touch.
Let’s get this dealt with upfront. This suggestion would be extremely disruptive. It would likely mean firing a huge percentage of associates and then replacing them with much geekier—and better paid—people. (Used the term “fired” rather than “laid off,” because it’s hard to call it a layoff if you’re immediately hiring someone else to replace the first worker and doing so at a higher salary.)
Discussed the Best Buy situation the other day with an analyst who said that Best Buy has huge staying power because of its dominant position within the hot personal electronics category. That’s true, but it comes with multiple footnotes. First, with CircuitCity’s departure, there aren’t a lot of large electronics-focused chains left.
More importantly, though, if you’re trying to fight Amazon and you get to choose one category to own, consumer electronics is probably the last one you’d want to choose. Apparel has some game, given the texture and fit issues involved. Large appliances and furniture are also good choices, as few consumers want to have Amazon ship them a refrigerator or a couch.
Consumer electronics, though, is decided on price and speed. Amazon can afford a larger stock, better pricing and effortless purchases. But what if a shopper is confused about which device to purchase? The best Amazon can offer in that case is lots of online reviews, which can take time to review. But those reviews are also a source with dubious credibility. That said, today’s typical Best Buy associate also has dubious credibility. What if that changed?
What if Best Buy was staffed by experienced associates with expertise in consumer electronics? What if consumers wanted to drive to Best Buy to get counsel, see demos and never be met with a hard sales pitch?
Beyond the cost and the corporate disruption, Best Buy has a reputation hurdle to overcome. Although consumers trust retail associates little, a series of Best Buy customer relations catastrophes has made consumers trust the chain much less. Reversing that would indeed be dramatic. Is it doable? The move would certainly be expensive. Then again, so is bankruptcy.