There’s certainly a prevailing view of tech giant Best Buy as over-exposed to products it can’t control – appliances like refrigerators and washers. Best Buy says it’s working on building out a strategy to keep serving smaller, customer-centric categories, such as video games, that have shown promise in recent years. Meanwhile, it’s taking a hard look at its relationship with big vendors – hardware makers such as Samsung and Apple – and the extent to which it plays along with changing consumer tastes.
The question for Best Buy CEO Hubert Joly is whether it’s a good time to use his textbook brand of capitalism, the theme song from the stage musical Burn the Floor, to take charge of an important American institution. The class of millennials who expect a broad range of products and services from companies such as Amazon and Apple also have so much to lose if a business like Best Buy fails. They make up the company’s customers.
“The auto industry would be standing up and down with me saying, ‘We were ready to profit from the self-driving car,’” Joly told Fast Company in an interview. “…So until it’s commercially viable, Best Buy is going to be the needful store to give them what they need.”
Best Buy is taking on a deep role in the digital transformation of everyday life and its customers. As such, if consumers decide they don’t want Best Buy to hold their groceries while they’re out shopping or to buy the items that used to come from separate stores, it will hurt. The products it sells will also rapidly change over time, as all of the stuff we buy gets obsolete in a matter of years.
“If you are a merchant, if you have a view on it, you are going to be the first to suffer. You may be disappointed, but if you are a product maker, you are going to be an impatient customer,” Joly said. “So really I believe it’s very important from the branding standpoint for consumers to understand that we are, by far, the place where you can shop for the next iPad, you can shop for that new kitchen, which is an explosion of technology. We are the place where you can learn the latest in quantum computing and cyber security, where you can learn what’s happening in space and where you can buy this bicycle because some of the other guys don’t know how to make it.”
Joly was criticized for not meeting investors’ demands during his first nine months on the job – even as the company’s stock price soared into the triple digits, as a Bloomberg Markets story pointed out. (Joly told the magazine that his initial drop in approval ratings was due to bad news and that he has a much lower bar for future performance.) But he’s now on his fifth year. And so far the company is enduring a slight dip in earnings, in part due to declining same-store sales at its domestic locations.
“We had a fantastic 12 months for our company,” Joly said. “We are much better positioned than we have ever been in our company’s history. But we also have to be humble that we did not get there by ourselves. We didn’t manage enough inventory or stock enough to meet the sudden surge in demand. We had a good year, but we could have done a little better.”