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Best Buy’s Dunn: Surprised By Sudden Slowdown

Minneapolis, Minn. — Business dropped off so quickly for Best Buy starting in late September that it was unable respond fast enough to the new marketplace realities, president and chief operating officer Brian Dunn said.

Speaking to a small group of reporters at Best Buy headquarters here late last month, Dunn said the company “made a lot of adjustments but couldn’t change fast enough,” given the three to four weeks it takes for the $40 billion retail giant to shift course.

The chain is responding by cutting discretionary expenses, including work-hours for store personnel, and may curtail plans for new store openings. But despite cutbacks, Dunn promised to accelerate spending in areas that will deliver “massive return.

“We won’t cut our way through this, we will grow our way through this,” he said, and will emerge from the downturn a stronger business.

Dunn believes that consumers “will still have gift lists” for the holidays, even though most will opt for smaller, less expensive items given the “deterioration” seen among the company’s mid-level and lowest-tier shoppers. Nevertheless, Best Buy’s best customers — the 20 percent that are affluent, young and mortgage-free, or are “fanatics about tech gear” — were still spending money on fully-featured products through October.

What’s more, “We’re only in the early innings of our industry’s most exciting era,” he assured. “Half of the TVs out there aren’t hooked up to an HD source,” suggesting that the HD revolution hasn’t even begun.