Best Buy Exec Suddenly Resigns
"The Best Buy model for decades," Stephen Gillett told me, "was that if Megan’s going to leave her house and drive to buy a new TV we need to get her to drive past Circuit City and CompUSA. Now we’re competing with 'Megan doesn’t have to leave her house'."
If anyone could win that competition, it's Stephen Gillett, the digital wizard who joined Best Buy nine months ago. Gillett was part of the team that led the Starbucks turnaround, an in an interview I did with him last month, it was clear that he was thinking deeply and smartly about the challenges that Best Buy faces, and how the company might reposition itself. "With things like home appliances, people are going to want the things we offer, for example, the delivery to service and install. Or Geek Squad: thousands of people sitting in homes, doing installations, across all the platforms,” he told me. “If you’ve got a Kindle, a Samsung television, an Android phone, good luck getting service for that at Amazon.”
"If Best Buy still has folks like Stephen Gillett," I told myself, "they've still got a fighting chance."
Then he left.
Yesterday news came that Gillett was stepping down in order to move to Symantec as COO. It's a huge blow to the company, not just because they're losing his talents, but because of what it suggests about the company's prospects. Reporting by the Minneapolis Star Tribute (Best Buy is headquartered in Minneapolis) suggests that itmay simply be the fallout from internal politics. Hubert Joly took over as CEO a few months ago, and of course, he's going to have his own people and his own vision for the firm. Nonetheless, as one retail analyst told the Strib, "it looks bad for Best Buy". The resigantion seems to have taken the company by surprise.
As I reported earlier this month, the challenges the company faces are simply enormous. The big box stores used to be the leaders in selection, convenience, and price; now Amazon, with its forty warehouses, has them beat on all three. Amazon's head of fulfillment (i.e. shipping stuff to you) told me that their build cycle for warehouses is down to under a year, in an industry where 3-5 years is the norm. That means they can be incredibly responsive to changes in demand patterns and emerging competitive threats. And, of course, that their economies of scale just keep growing. It's still unclear whether Best Buy can meet that threat by shifting its business model to something that's harder for the internet to match. But it will probably be a little bit harder without Stephen Gillett.