Today I ran across a story in Salon Magazine focusing on an unlikely comeback story–Best Buy, which was at one time teetering on the edge of collapse, seems to have made a return from the brink under the direction of its new CEO, Hubert Joly.
For a while, it looked as though Best Buy might follow in the footsteps of vanished big-box store Circuit City–its sales and profits had slid, and then-CEO Brian Dunn had been embroiled in a personal conduct scandal. But Joly came in and closed some underperforming stores, and focused on price competitiveness and customer service.
“Joly has taken a number of steps that have really enhanced the business: closing bad stores, downsizing stores that were too big, bringing in exclusive product, upgrading service,” Howard Davidowitz, chairman of New York-based Davidowitz & Associates, a national retail consulting and investment banking firm, told Salon. “These are not easy things to do. Best Buy stands out as a brick-and-mortar retailer [that] has navigated this problem successfully.”
I have a little personal experience with Best Buy’s level of service in the pre-Joly days, given that for three years I worked in a call center that supported Best Buy. (Although I wasn’t permitted to say so publicly, I recused myself from covering any Best Buy-related stories for TeleRead during that time to avoid conflicts of interest.) I started out as a Geek Squad phone support rep for a year, then moved to supporting Best Buy store brands Insignia, Dynex, and Rocketfish home electronic products. It was that latter role that put me in a position to observe Best Buy’s service level (not to mention giving me a pretty good crash course in how DRM affects consumers’ experiences with media, as well as how TV manufacturers relate to consumers and repairability in general, but those are matters for other stories).
The thing about the manufacturer warranty on Best Buy store brand televisions is that TVs below a certain size have to be serviced through Best Buy stores. As the manufacturer of record for those brands, Best Buy collects those TVs at its stores, then sends them out to a regional repair center for customer service. TVs over a certain size are too fragile to ship; those get a Geek Squad in-home service call instead.
But nearly every day on the job, I would encounter some disgruntled Best Buy customer who had taken their TV of the proper size in for service, as the warranty documentation told them to, only to be told by the peon behind the Geek Squad counter that, no, they needed to go home and call the manufacturer, because Best Buy could only issue refunds for products it sold within the first 30 days (later reduced to 15 days) of purchase.
But, naturally, when they went back home and called us, we could only tell them that they needed to go back to that store, because Insignia has no way to service TVs under its warranties outside of Best Buy. (In a few rare instances when there is no Best Buy within hundreds of miles, the Geek Squad contracts with local repair shops to take care of such matters, but that didn’t apply in these particular cases.)
To make matters worse, it frequently came out that the customer was from some rural area and had to drive 50 miles to get to the store and then 50 miles back home again before calling me! This would invariably end up with me doing a three-way call to the Best Buy store to straighten the in-store rep out and make sure that the customer knew they would get the service they were supposed to when they went back to the store.
This was far from a rare occurrence. As I said, I got at least one of that sort of call nearly every day. It was a common pet peeve of myself and my fellow Best Buy phone reps that Best Buy apparently didn’t even bother to train its in-store representatives that Insignia, Dynex, and Rocketfish products were its own store brands, so for those products Best Buy was the manufacturer and service center. If Hubert Joly’s vaunted service improvements included fixing that little glitch, I’m sure it has reduced a lot of frustration both in customers and in phone tech support reps.
We covered Joly’s early efforts in 2013, focusing on a piece suggesting Best Buy’s new strategy could be key to competing with Amazon. But it seems to me that a better way to interpret it now could be as an example of how struggling bookstore chain Barnes & Noble could also turn itself around. After all, Barnes & Noble is known for having pretty poor customer service itself these days. And just as Best Buy recovered after competitor Circuit City went bankrupt, Barnes & Noble has the example of Borders to fear.
And here’s another parallel between the two: Barnes & Noble just hired a new Chief Operating Officer, Demos Parneros, who was previously the President, North American Stores & Online for office-supply and electronics chain Staples. While there are those who are surprised B&N hired a new officer with zero bookselling experience, Barnes & Noble hasn’t been a pure bookstore for quite some time. In fact, B&N overlaps with big-box electronics stores such as Staples (and, for that matter, Best Buy) in one important respect: it has its own consumer electronics line of tablets and e-readers, of which it just announced a new $50 model for this Black Friday.
Something else Best Buy has done under Joly is create “store-within-a-store” areas where representatives from companies like Apple, Microsoft, and Samsung could run their own little miniature retail areas, and be on hand to address customer concerns directly. It seems as though Barnes & Noble has tried to do something like that for its Nook line, creating a boutique-style Nook area within its stores, but never could quite get the hang of it. But Staples sells products as disperate as rollerball pens and tablets/e-readers itself, which isn’t so different from selling products as disperate as books and tablets/e-readers. So, perhaps a former Staples officer could figure out how Barnes & Noble could do it better.
In any event, competing with Amazon is part of what Barnes & Noble needs to do, just as it was part of what Best Buy needed to do. (Undoubtedly, that’s why it’s taking a page from Amazon’s book and introducing a $50 Android tablet just in time for the holiday season.) And another note from that Salon story is that Best Buy sales staff are being more fully empowered to compete with Amazon:
During this holiday shopping season, Joly has taken his company’s service-focused angle even further. The executive said during a conference call with analysts on Thursday that members of Best Buy’s sales staff has been armed with tablets. If they find a better price online, they’re authorized to match it for their customers. It’s this kind of thinking that has moved Best Buy from the retail graveyard into the upper echelon of American companies.
But as I noted in that story I linked from the Barnes & Noble customer service mention above, B&N can’t even price-match its own web site. If a customer orders a book from BN.com for in-store pick-up, they get charged the in-store list price instead of the web site discount price when they go to pick it up. If Parneros is looking for things to fix to get Barnes & Noble back on its feet again, perhaps he should consider starting there.