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Best Buy remains a work in progress for CEO Joly [Pioneer Press, St. Paul, Minn. :: ](Saint Paul Pioneer Press (MN) Via Acquire Media NewsEdge) April 16--Hubert Joly remembers 2012, when he was asked to lead Best Buy, as a year of unprecedented turmoil for the consumer electronics retailer. But in a speech Tuesday, Joly traced the start of Best Buy's problems to an earlier time, after its heady days of rapid growth had tapered off and the Richfield-based retailer began neglecting its customers. "Starting maybe 5-6 years ago, it's hard to date it precisely, the company started to go sideways," Joly told the Economics Club of Minnesota luncheon in Minneapolis. "It missed a bit of the online wave. Maybe complacency got into it." Then in 2012, Best Buy's mounting troubles came to a head. CEO Brian Dunn resigned in disgrace. Company founder Dick Schulze followed him out the door -- then mounted an outside attempt to purchase Best Buy and take it private. And through it all, Best Buy's stock was collapsing. "What did I see that made me want to take on this challenge?" asked Joly, who at the time was CEO of Carlson Cos. in Minnetonka. "The first thing is, I like challenges. And this was a very nice combination at the time of strategic challenges, organizational challenges and operational challenges. "But this was also a company with amazing assets," Joly added, citing the huge base of 1,100 big-box stores, the 40 million active Best Buy shoppers, the nation's 11th largest e-commerce platform and a powerful retailer that remained essential to electronics manufacturers. "From what I could see from the outside, the reason for the sideways movement was essentially self-inflicted," Joly concluded, adding that "we had neglected our customers." In the past 20 months, Joly has certainly calmed the waters. Best Buy stock was one of the market's top performers in 2013. He's hired a well-regarded management team. He has pruned what he termed Best Buy's bloated cost structure. But big challenges remain for Best Buy as it fights to compete with Amazon, Walmart and other retailing giants. The challenges were vividly illustrated this year after Best Buy's disappointing holiday sales sent its share price plunging. If Joly and his team were getting complacent about their successes, the post-Christmas letdown shook them out of it. "One of the ways to do that is to see your share price going down 35 percent," Joly said, later adding, "I was depressed -- for about 30 minutes." Then he decided to view the plunge as motivation to keep remaking Best Buy. Still, transforming brick-and-mortar retailers in the digital age is a difficult task that few have mastered. The latest reminder occurred Tuesday, when electronics retailer hhgregg -- a direct rival of Best Buy's in the eastern U.S. -- stunned Wall Street by warning its quarterly sales fell 10 percent, and its consumer-electronics sales plunged a shocking 19 percent. Nevertheless, Joly told the Economics Club he is convinced Best Buy can compete online against the Amazons and eBays of the world through customers' advice, service and convenience. Along with beefing up Best Buy's digital capabilities, Joly is pushing its ship-from-store abilities, too. "Amazon has 60 distribution centers throughout the country," Joly said. "We have 1,000." He did ask the audience of about 300 business executives to help push for legislation requiring online retailers such as Amazon to collect state sales taxes. In Washington, the U.S. Senate has approved the idea, but the matter has stalled in the House. "We don't believe the government should subsidize Amazon and eBay," Joly said. Tom Webb can be reached at 651-228-5428. Follow him at twitter.com/TomWebbMN. ___ (c)2014 the Pioneer Press (St. Paul, Minn.) Visit the Pioneer Press (St. Paul, Minn.) at www.twincities.com Distributed by MCT Information Services |