Thursday, April 19, 2012

Ave Atque Vale, Best Buy

Today's post brought bittersweet recent memories. In June 2011, this blogger's 4-year-old 32" Sony TV went the way of "Avatar," but all of the figures were crimson. OK, after a 10-minute drive to the neighborhood Best Buy outlet, the whippersnapper in the TV department said that one or more of the color spectrum tubes had failed. Since most electronic stores no longer carry replacement parts, the TV must be replaced. Whatever. The bottom line was that it would cost as much as a new set to repair the 4-year-old Sony. Duh! THis blogger bought a new Sony 32" TV and now is greeted by news that Sony is going belly up. More recently, last week, the gullible blogger went to the neighborhood Best Buy to purchase a map upgrade card for his dashboard mounted GPS unit. Immediately, the blogger thought that he was on the set of a remake of "Dead Man Walking." Long story short, the blogger left Best Buy and drove to the geek-castle aka Fry's Electronics. Fry's installation department attached the new GPS unit to the already-installed dashboard mount and refunded the payment for installation. No more map upgrade card purchases. The new GPS unit easily detaches from the mount and with a manufacturer supplied USB-cable, the new free maps will be downloaded annually from the manufacturer's Web site. On that happy note, this blogger will drive a little farther to an electronic big box that's not moribund. If this is (fair & balanced) creative destruction, so be it.

[x Slate]
Making Best Buy Better
By Farhad Manjoo

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Buying a television should be easy. In theory, all you’ve got to do is pick a screen size, set a budget, and choose the best model that fits your criteria. What does best mean? The TV industry would like you to believe that every TV is unique—that there are major differences in picture quality and features across different brands, and that you should spend a lot of time researching before you buy. The truth, though, is that manufacturers add unnecessary features and bombard us with confusing specs to disguise the fact that most TVs are pretty much the same.

It’s not just televisions. We live in an age of commodity electronics, where most gadgets are more or less interchangeable. You aren’t likely to notice any major differences between a product made by Samsung versus one made by Toshiba—they’ll both likely be made out of the same parts, in the same way, and perhaps in the same factories. Given these similarities, if you spend more than 10 minutes comparing different models of any type of gadget, you’re doing it wrong.

But you’d never realize this if you were to visit your local Best Buy. America’s largest electronics retailer made its fortune by offering lots of choices. Now, on the way to its grave, it is still waving the banner of endless selection. My local Best Buy carries nearly a dozen nearly identical 32-inch TVs, a similar number of 42-inch sets, and no fewer than 20 different 55-inch TVs. You’ll find the same bounty in other product categories. If you’re looking for a point-and-shoot camera, Best Buy wants you to choose between [sic] 15 different models. Need a two-terabyte external hard drive? My store has six. In the market for a 23-or-so-inch computer monitor? Pick one of nine.

Best Buy is in a lot of trouble. Once the undisputed leader in technology retail—it vanquished Circuit City, CompUSA, and every mom-and-pop electronics store in the country—the company is now being killed by Amazon online and Apple offline. In March, Best Buy reported a $1.7 billion quarterly loss and announced that it would close 50 stores. Then, last week, the firm’s CEO Brian Dunn suddenly resigned. The company declined to fully explain what prompted Dunn’s departure, but the Wall Street Journal has reported that Best Buy has been investigating an alleged relationship between Dunn and a younger subordinate.

Whatever the reason behind it, Best Buy should use Dunn’s departure as an opportunity to rethink how it sells gadgets. In particular, it’s time to abandon the idea of endless selection. If Best Buy wants to survive, it’s got to replace its hulking, teeming stores with smaller, less crowded, more intimate spaces. When you walk in to buy a 32-inch TV, the guy in the blue shirt shouldn’t make you choose between a dozen nearly identical models. Instead, he should show you a single set, a TV that Best Buy’s experts have determined offers the best features at the best price. The firm could do the same across its inventory, culling the tech universe down to a few essential, can’t-beat products. In this way, Best Buy would transform itself from a supermarket into a boutique—a place with fewer things for sale and lots of friendly, sophisticated, helpful experts who’ll save you the hassle of researching your next TV or PC purchase. They’ll do all the work for you.

Why would going small work for Best Buy? Because big has become the domain of the Web. There once was a time when massive selection was a key differentiator in physical stores—the more stuff you stocked, the more likely you were to appeal a wider range of customers. But now, no matter how many TVs Best Buy keeps in stock, its selection will never match that of Web retailers. If you’re the type of customer who studies every 32-inch set before choosing one, you’re not likely to bother with a store.

Maintaining a big selection costs big money and offers a perverse advantage to Best Buy’s online rivals. By keeping so many TVs on its sale floor, Best Buy is offering itself up as a showroom for Amazon: Potential customers can walk into a store, check out the stock, and go home and buy the product they like best online. Then there’s the “paradox of choice”—the idea that giving consumers lots of retail choices tends to paralyze and confuse them, and sometimes pushes them to leave your store empty-handed. Though this theory is controversial, the runaway success of Apple’s retail stores proves that a small, curated product line doesn’t necessarily hurt sales. Why wade through 30 laptops when you only want to buy one?

In his last few months at Best Buy, Dunn made a few smart moves to turn the firm around. Last year, the company announced a plan to shrink some of its stores and sublease the extra space to new tenants. The firm is also planning to replace some of its shuttered stores with new, tiny locations that will be called Best Buy Mobile. These outlets will be situated in shopping malls, and each location will take up only take up about 1,200 square feet. (By comparison, the average big-box Best Buy is 45,000 square feet, while a typical Apple Store is about 6,000 square feet.)

But turning Best Buy around is not just a matter of downsizing. The company also needs to change its approach to customer service. When I walk into a Best Buy, I find it difficult to find what I’m looking for. It’s usually a hassle to get help—there are never enough employees on the floor—and when I do get a hold of someone, there’s a good chance the person can’t help me. Last year my wife and I went to Best Buy to look for a new refrigerator. We found something we liked, but we had a simple question: Would this model fit in our kitchen? We asked an associate if the width listed on the fridge’s tag was its dimension with the door open or closed (that turned out to be a key factor in our kitchen). He didn’t know. He called over another blue shirt, but that guy didn’t know either. Eventually the salesman offered to go to the back to get a tape measure; it took him about 10 minutes to find one. We didn’t end up buying the fridge.

Shrinking its selection would improve this situation—the fewer products it sells, the easier it would be for Best Buy’s employees to become experts about all of the goods on offer. It would also make it easier for customers to find stuff. Still, the transformation I’m calling for is radical—it would involve massive physical restructuring, as well as a program to re-educate the company’s staff. It won’t be easy. It’s not guaranteed to work. On the other hand, if Best Buy sticks to its current course, it’s certain to die. Given the alternative, the company has no choice but to make a fundamental change. Ω

[Farhad Manjoo is Slate's technology columnist and the author of True Enough: Learning To Live in a Post-Fact Society (2008). Manjoo graduated from Cornell University in 2000. While there, he wrote for and then served as editor-in-chief of the Cornell Daily Sun campus newspaper.]

Copyright © 2012 The Slate Group Division/The Washington Post Company

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