How Would You Fix Best Buy?
I'm not sure if this is the best forum to post this in, since Best Buy covers a large scope. But whatever. Best Buy's CEO just resigned from his position. Let's say you were just chosen as the new CEO, what would you do to bring back Best Buy to its former glory?
Some things to keep in mind is that first, there is a thing called overhead. Brick and mortar stores cost money just to upkeep. Plus you have to pay the employees. So it's going to be hard to truly match an online retailer in terms of pricing. Furthermore, many of the most popular items, such as iPads and Xboxes, are sold at the same price that the store paid for them. So you make zero profit off of those. The only real profitable things would be accessories (like controllers to go with a game system or headphones to go with the iPad) and services, like Geek Squad protection plans or in home setup. This is just a broad generalization; there are exceptions. But for the most part, this is how it seems to be.
So now that you know the rules, let's play!
What I would do is shift the focus towards smaller stores. I would close out a lot of the big-box stores. Not all of them. But I would definitely trim the number down, especially in areas that have a lot of overlap or if a store is really underperforming with no hope of recovery.
Instead, I would focus on opening more of those Best Buy Mobile shops. Those were one of the few things that still brought in profit. These could be put in malls or plazas. At the same time, I wouldn't go crazy with them either. 10 of these in a small town is just wasting money.
I would also consider opening another small-style store. Let's call it Best Buy Gaming. The key focus for this would be to take on Game Stop. Since these stores are smaller and have less employees, the overhead would be less. This (in theory) should give a little more wiggle room with pricing. These would sell games slightly cheaper than Game Stop. Not at a loss, but not at MSRP either (when possible). In addition, one advantage that Best Buy currently has with used games is that it pays the same price for a game, regardless of current store inventory. This could be used as a tactic against Game Stop (since their price depends on current inventory). These stores could also have a small selection of recent and popular moves and CDs, just to throw in a little variety.
This covers the mobile and gaming sections, but what about the rest? Whatever remaining big box stores could help to fill in some of that gap. But for those who no longer have one, the website could be used to help. The website would be massively overhauled to make it a viable competitor to Amazon (right now, it's just horrible). In addition, the customer service over the phone would be retrained to have world class customer service (something else that is also lacking at the moment).
Overall with an emphasis on smaller stores, I think Best Buy could be more profitable. The Mobile and Gaming stoes would stock a small, but popular subset of the big Best Buy stores. Really popular items like iPads could be stocked at both. Plus with an emphasis on the web for the rest, it could save even more money.
If you actually read all of this, what do you think?