Best Buy CEO Needs To Be A Realist
Best Buy CEO Hubert Joly may have given those believe his lack of retail and merchandising experience make him a bad fit for the company proof of their instincts. Or at a minimum Joly may have shown he’s not much of a reader.
Last Sunday in an interview with the Minneapolis StarTribune, Joly gave two telling statements.
First, Joly denied that “showrooming” is a threat to the retailer. Best Buy’s new top executive said the argument that showrooming — where consumers examine a product in a store only to go buy it online for a better price — is hurting sales is “one of the greatest falsehoods about our company.”
Apparently Mr. Joly isn’t reading the business press. Releasing results of research on mobile phone usage and consumers, Business Intelligence said yesterday the top use of mobile phones by consumers is: Research and comparison shopping. Mobile shoppers are likely to use their phones in-store to compare prices and consult on potential purchases with friends. An analysis by Deloitte estimates mobile will influence $158 billion of in-person retail sales this year. This is a big problem for brick-and-mortar retailers, as it brings ecommerce competition directly into their stores.
Next, Joly said he’s “not a big fan of shrinking the company,” adding that the retailer should squeeze the most it can out of its existing stores.
Oops! Best Buy reported a decline in same-store sales on August 21st — its eighth in the last nine quarters. Sales at stores open at least 14 months fell 3.2 percent in the second quarter that ended Aug. 4, including a 1.6 percent decline at its U.S. unit and an 8.2 percent drop internationally.
Same store sales is one of the truest indicators of a retailers growth and overall health. All things considered it would be difficult to convince most merchants after seeing those numbers and reading into the mobile shopping trend that “staying the course” is a good plan.
What Best Buy needs now is a leader who is a realist. One who can cut through the paradigms, tip a few sacred cows and position the brand for the new era of retailing.
We at Thought-Tech have nothing against Mr. Joly and do not envy his daunting task. But his public comments do come as a surprise and we felt it important to share them here.