While some may think that Best Buy is doomed, the company’s CEO Brian Dunn wholeheartedly disagrees (via the Consumerist).Dunn recently put up a blog post responding to the recent media coverage of his company — most notably a lengthy article by Larry Downes at Forbes that meticulously detailed Best Buy’s slow demise.
He first concedes that Best Buy has been taking too long to transform its business model to accommodate the online marketplace, and that the anger over its Christmas cancellation debacle was warranted.
Then, Dunn goes on to state his case about the validity of Best Buy’s business model. He writes:
“First, some believe the internet has made physical retailing (i.e., stores) irrelevant. There’s no doubt that the internet, and the mobile web in particular, have changed the way people shop, but there is strong evidence that consumers continue to value the experience of shopping in stores. A recent study by the NPD Group, a leading market research company, notes that nearly 80% of consumer electronics revenue still moves through physical stores. Additionally, approximately 40% of customer purchases made through Bestbuy.com are picked up in one of our stores. And the truth is, traffic in our physical stores increased in our third quarter and has been trending positively for most of the year.
Finally, there are those who question the validity of Best Buy’s business model. This misguided perspective is especially troubling for me, because it blatantly and recklessly ignores overwhelming evidence to the contrary. Best Buy is a financially strong and profitable company that has generated more than $2.6 billion in cash flows from operating activities in the first three quarters of the fiscal year. We also delivered positive operating income in each of the first three quarters of fiscal 2012. We grew total market share in the third quarter according to the most recent public data available. We have closed down certain operations that were not profitable, which we expect to have a positive impact on our earnings going forward. And we are focusing the company on areas where we see the greatest opportunities for growth and profit: mobile devices and connection plans; enhanced digital and e-commerce strategies; growth in our services business; and expansion of our established business in China.”
There you have it, right from the head honcho. You can read the full post here at Brian’s Whiteboard.
What do you think about it?
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