VOL. 124 | NO. 123 | Thursday, June 25, 2009
New CEO Took Reins at Best Buy on Wed.
ASHLEY M. HEHER | AP Retail Writer
CHICAGO (AP) - It was September 1985 when a 24-year-old Brian Dunn knotted his skinny leather tie and set off to began a job as a sales clerk inside a small electronics store in Minnetonka, Minn., named Best Buy.
He was unemployed and took the paid-on-commission job after his mother – an employee in the chain's accounting department – convinced him to give the company a try.
"I wasn't sure I'd make it through the holiday season that year," he said. "I remember going home with the sore retail feet."
On Wednesday – almost 24 years after his first day selling video cassettes and speakers the size of chairs – Dunn became chief executive of Best Buy Co. Inc., which has grown to become the world's largest consumer electronics chain.
"I was there," he said during a speech before shareholders at the company's annual meeting in suburban Minneapolis. "For the good, the bad and the ugly and everything in between. And I remember, and I will insist we remember the lessons we learned from the challenges and changes along the way."
The 49-year-old (who eventually ditched the self-described Miami Vice look as he moved through the company's ranks and now has a teenage son who works as one of Best Buy's ubiquitous "blue shirts"), has heady challenges ahead.
Despite the demise of its closest competitor, same-store sales are down for the third straight quarter at his longtime employer. The company's corporate office has hundreds of empty desks after a voluntary buyout. And heavyweights Amazon.com, Wal-Mart Stores Inc. and Costco Wholesale Corp. all have their sights set the company's core business.
"I think he certainly has his hands full," said Morningstar analyst Brady Lemos.
Dunn, whose appointment was announced in January and who until Tuesday was chief operating officer, succeeds retiring CEO Brad Anderson to become the third person to lead the retailer and its 155,000 employees.
Anderson – also a longtime Best Buy employee – became CEO in 2002, along the way managing to almost triple sales, which reached $45 billion at the end of its last fiscal year.
He also made the chain the go-to location for consumers hunting for everything from musical gizmos to computers, added installation and repair services like Geek Squad and leading the company's push to cater to and woo specific groups of customers at certain stores.
Now, Dunn will try to use that momentum to scoop up more customers from defunct Circuit City Stores Inc. He'll also have to execute his four-part plan aimed at keeping Best Buy competitive and able to fend off attacks from retailers hungry for a piece of the company's sales.
Among them: Boosting the chain's market share in local communities by stocking stores with an assortment of products and smart employees, and amassing a "full buffet" of so-called connected digital solutions by offering everything from gadgets and accessories to smart-phones to digital music, in part through the company's growing cell phone venture called Best Buy Mobile and its recent acquisition of the popular file-swapping service Napster.
"We're moving to a time when every device connects to every other device and every human being can connect to every other human being," he said. "We're moving to an era of ubiquitous connectivity."
Although there are signs that the downturn is weakening – economic activity rose in May by the largest amount in more than five years and some economists think a turnaround should begin by year end – Best Buy may have a hard road ahead thanks to what Anderson has called "rapid, seismic changes in consumer behavior."
Whether consumers return to their spending binge – particularly for some expensive items like appliances – remains to be seen. During the most recent quarter, although store traffic declines were the lowest in a year, the average number of products customers bought during store visits fell.
Still, founder and chairman Richard Shulze said he's optimistic.
"Brian understands our strengths. He acknowledges our weaknesses," he said. "And he, like Brad, works tirelessly to improve and create new opportunities everywhere."
Best Buy shares climbed 58 cents, or 1.8 percent to $33.56 in late Wednesday afternoon trading.
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