Best Buy founder Richard Schulze shook things up the other day when he mentioned that he’d very much like to have his company back and out of the hands of shareholders. Since then, a few details of how Schulze plans to keep the ship afloat have surfaced, but will it be enough to remain competitive or is he just making matters worse for the company?
The Wall Street Journal reports that Schulze’s main plan is to cut retail prices. Thus, when those of us who go to Best Buy to check out a computer or TV before just going online to buy it for less, maybe we’ll have another look at the price tag and decide it’s not that much more expensive than buying on Amazon and you don’t have to wait for shipping.
Meanwhile, Schulze also wants to keep pushing — and improve upon — the current company line that Best Buy’s in-store experts are a selling point. The Journal says he envisions a Best Buy that is more like the current Apple store model.
He also says that the company’s ongoing efforts to scale back its number of retail stores — and the size of existing outlets — is only pushing Best Buy closer to the grave.
Aside from the fact that Schulze’s plans put him in direct conflict with the company’s current direction, the Journal points out the problem of trying to grow while the bricks-and-mortar retail world is shrinking:
Mr. Schultz’s approach—of lowering prices while avoiding major cost-cutting—would likely lead to substantial run up in costs in the first couple of years that would be difficult for a public company to justify, the people familiar with the matter added.
“As long as the top line is slowing you have to cut costs at a similar rate or your cash flow starts to suffer,” one retail analyst explains.
Even if Schulze’s attempt to buy back the company is not successful, the attempt on its own could impact Best Buy’s immediate future.
While interim CEO Mike Mikan has been pushing to keep the job, the Minneapolis Star-Tribune reports that he could lose it if the company’s board decides it wants a retail heavy-hitter as CEO to counter Schulze’s take-back bid.
And even then, that CEO’s tenure could be short-lived — and will require a huge golden parachute — in case Schulze succeeds and chooses to install his CEO.
So on on hand you’ve got the company founder who has a vision for Best Buy that may work, but which could drive the company into the ground if it doesn’t reap positive results rather quickly.
On the other hand, the current Best Buy leadership seems to be taking the stance that shrinking the company is the best way to keep it from sinking.
And though both sides seem worried about trying to have their retail outlets compete with online sellers, you don’t hear much about a strategy to bolster BestBuy.com to the point where it’s not just an adjunct to the in-store experience but can compete directly with Amazon as an e-tailer.