How Hubert Joly Broke the Mold and Saved Best Buy
May 23, 2019
- Author: Steve Smith
May/June 2019
More articles in this issue:
The old bromide, “What goes up must go down,” could have been coined for the fates of many national and regional electronics/appliance retailers over the past few decades. It was also considered conventional wisdom.
After all, former leading electronics and appliance retailers – Circuit City, Nobody Beats the Wiz, Ultimate Electronics, Incredible Universe, Crazy Eddie, Silo, Tops Appliance, The Good Guys, Fretter, hhgregg, Newmark & Lewis and many others – have disappeared after faltering.
The reasons for their demise, and the demise of others, have been well-documented over the years. Of course, Amazon and online retailing was the cause of many closures. For many, they went public and, under orders from Wall Street, expanded too quickly, having to staff up and grab real estate quickly to meet the hard-driving sales volume and profit requirements investors demanded. And others, well, good old-fashioned bad management or financial malfeasance made them go away.
Since the 1980s, when many electronics/appliance chains began to go public, once sales and profits began to slip, they hardly ever rebounded.
Hubert Joly recently announced he will be stepping down from his post as CEO of Best Buy in June, after an almost seven-year run. It’s now worth looking back to see how he turned the chain around, maintaining its number one position in the market and bringing it back as a growing, vibrant and profitable operation.
In the summer of 2012 Joly was CEO of Carlson Wagonlit Travel, an international hotel and travel conglomerate. Those who believe in conventional wisdom noted that Joly had no retailing experience and that he joined Best Buy at a time where internal foul ups and the pressure of Amazon – and Walmart – made it inevitable that the longtime electronics/appliance giant would disappear.
Joly had different ideas. One of the first things he said was, in effect, if the name of the chain is “Best Buy” the chain better provide them. He instituted a price-matching guarantee to stop customers from going to Amazon, or its many other rivals. But that was just the beginning.
Joly’s Renew Blue strategy emphasized Best Buy attributes that some said were weaknesses: a focus on its big box stores, improved customer service, strong product selection and Geek Squad, its service and installation operation. He began to speak with rank-and-file blue shirts to find out what their concerns were about Best Buy, and Joly improved training, salaries and benefits for them.
The CEO with no retail experience remerchandised Best Buy stores, where CDs and DVDs were used as traffic builders, and began to partner with Apple, Google, Microsoft and Samsung where their products are featured in mini-departments. Best Buy’s online presence was improved, and as part of the strategy stores are now used as warehouses so consumers can quickly pick up items they have ordered, which has resulted in 40 percent of online sales being picked up at the big boxes.
As chief financial officer Corie Barry prepares to take the reins in June, with Joly becoming executive chairman, challenges remain. At retail, especially when you are selling consumer technology, it is the nature of the business.
The lesson that Joly has provided Barry and the rest of the management team at Best Buy, and for retailers of all stripes, is that both conventional wisdom and old bromides can be proven wrong with strategic thinking and plenty of hard work.
Join our community of innovators and shape the future of technology.
