Minneapolis — Best Buy is anticipating a major restructuring of CE retailing over the next year and is prepared to absorb real estate and market share as businesses fail and storefronts close.
“We're sure there'll be material consolidation in the industry,” said Brian Dunn, president and COO, which will create “potential opportunities” for the No. 1 CE chain.
“If storefronts close, we'll jump in and connect with those consumers,” he told a small gathering of reporters Oct. 30 at Best Buy headquarters.
Dunn was reluctant to name potential targets, but acknowledged that Circuit City's plight obviously represents a
“tremendous opportunity” for the company, although he takes no glee in it.
“It would be a sad day for the industry if Circuit City went out of business, and I wouldn't be drooling over it,” he said.
Dunn described the current environment as the most challenging he's seen in his 23 years with Best Buy. “It's difficult as a retailer to plan,” he said, given the whipsaw effects of the financial markets and the simple fact that no one can predict the duration or the severity of the downturn.
"It's a real tough nut to crack,” observed Dunn, who said he had prided himself on the accuracy of past holiday forecasts. “Does the fear subside after the election? I don't know. Vendors are expressing great concern about what's going on here and how long it will last. They have questions about whether they should keep the factories running.”
What is certain is that “nothing will magically change over the next 90 days” — including the “great pain points” seen among low- and middle-income consumers — and that strong brands will emerge even stronger while weaker ones will go away.
To that end, Best Buy is controlling costs, investing prudently in the business and strengthening its relationships with vendors and consumers so that it will be well-positioned when the economy bounces back.
“We're looking out at the next 10, 20, 30 years,” Dunn said. “We're here for the long haul.”