What was going to happen next year, happened today and for those who have been in the industry for a while it is a sad day given the circumstances.
Dick Schulze, founder of Sound of Music in 1966 which eventually became the international retailing giant, Best Buy, has resigned from the board as of today.
In the debacle concerning the resignation of former CEO Brian Dunn last month the board moved to give Schulze the title of chairman emeritus, an honorary position, on June 21 and retain his board seat through June 2013.
Schulze said in a statement today that he is going “to explore all available options for my ownership stake.” And in a businesslike statement said, “I continue to believe in Best Buy and its future — and care deeply about its customers, employees and shareholders. There is an urgent need for Best Buy to reinvigorate growth by reconnecting with today’s customers and building pathways to the next generation of consumers.”
If you had suggested six months or a year ago that Schulze will not be part of the management team trying to turn Best Buy around, you would have been laughed out of the business.
You see, Schulze was always the smartest guy in the room, according to the many stories I heard from industry execs over the years and in interviews I had with him.
I heard the story from years ago about a NARDA (North American Retail Dealers Association) meeting Schulze attended as a member. He had a thick binder of notes outlining his plans for Best Buy and told his fellow independents about how his company would go national and take a lot of their market share. He wasn’t boasting, the person who told me the story said. Schulze just knew his strategy would work.
When I joined the old Home Furnishings Daily in the mid-1980s Best Buy had just left the NATM Buying Group with Circuit City, Rex TV and Silo I believe, because they wanted to expand, and Best Buy even went beyond Circuit and succeeded beyond what anyone could have expected.
Do you remember the store “Concepts”? I do and in the 1980s and 1990s it confused the heck out of me trying to cover it. Concept I, Concept II, Concept III – you needed a scorecard to follow all the features. In fact in Concept III Schulze put in interactive kiosks to get more information on products in the store, years before smartphones and tablets would serve the same purpose.
But the original concept that change the operation was when he took a disaster at one of his Sound of Music stores and stacked boxes of product on top of each other, sold it at the best price, and eventually changed the name of the store to Best Buy.
And of course he got rid of commissioned salespeople, which was seen as wonderful or terrible depending upon the brand you were representing at the time.
I caught up with Schulze for a special Best Buy issue for TWICE in 1994, going to Minneapolis and spending a couple of days with him and his management team at the time.
I’ll always remember that he predicted a few things that came true. He predicted, very accurately, what Best Buy’s annual sales would be by the end of that decade and the mix of product sales during that time – 40 percent for PC and home office, CE around a third, software (music, PC and videos) 15 percent, major appliances around 9 percent and the balance being furniture, accessories and warranties. (P.S. – No mention in my notes about video games.)
In that interview Schulze said that his goal was for Best Buy to become the next generation’s Sears. That is why he said the chain’s entry into majaps were “a big crusade for us.”
He targeted “a younger consumer demographic” with PCs and software, CDs and pre-recorded tapes (DVD would come a couple of years later) as part of an attempt to “wire and retain customers at a young age.” That’s why with Concept III stores Schulze put in interactive kiosks.
He hoped as they got older they would buy TVs, home theater systems and major appliances at Best Buy and for the most part, the strategy succeeded dramatically.
During his time as CEO Schulze had many executives who helped in the development of Best Buy, most notably Brad Anderson who succeeded him.
More people in this business have imitated the many retail innovations that Schulze championed, with various degrees of success, than just about any other retailer I can think of. So it is no wonder that he was elected to the Consumer Electronics Hall of Fame back in 2007.
One hopes that Dick has left Best Buy’s board and whomever becomes the new, permanent CEO of his creation, with a little of the retail magic that he has possessed over the years.