1. The Top 10 Reasons Wholesale Retail Stores Fail
Why Retail Stores Fail and How to Ensure That You Don't!
From Karen Waksman, former About.com Guide
It’s important to study success, but sometimes it’s just as insightful to study failures.
Whether you are considering starting your own wholesale retail store or have already established it, this
list of the top ten reasons for failure - and what you can do to avoid them - will help you keep your
business on the path to success.
1. Neglect
Entrepreneurs are often visionaries, which is great for creating a company. However, after the initial
challenge, many company founders look toward the next one. Without clear direction and involvement
from its leader(s), a company will soon go off course. Like anything else, a company requires careful
maintenance to remain at peak performance.
2. Disasters
Natural and man-made disasters often deal death-blows to companies, such as floods or fires. While it’s
difficult to avoid such disasters, company management can insure it carries adequate insurance and has
a plan for emergency scenarios.
3. Access to Capital
In business, finances are a often a paradox - it takes money to make money. While some companies are
able to start-up with little capital, they often reach a point where they need additional financing to continue
operations. Without those funds available, they are unable to meet their day-to-day expenses. Securing
access to capital before the company needs it is often the difference between success and insolvency.
4. Overhead
It’s important to study success, but sometimes it’s just as insightful to study failure. Whether you are
considering starting your own wholesale retail store or have already established it, this list of the top ten
reasons for failure - and what you can do to avoid them - will help you keep your business on the path to
success.
5. Poor Sales
Sales, of course, are the life of any business and without them, the business soon flounders. Some
causes of poor sales, such as economic factors listed previously, are out of the hands of company
leadership. However, many of the reasons for poor sales can be directly traced to management. For
instance, if changes in customer preferences and the market in general are ignored, sales will suffer.
While there is no way to guarantee sales, managers can be proactive and responsive to sales trends.
6. Management/Leadership Problems
Of the ten reasons listed, this is the one that is completely in the hands of the company’s owner(s). While
many people are great entrepreneurs - able to start a company from just an idea - these same people
sometimes aren’t ready for the management issues they face as the company matures. Without prior
experience or simply because of incompetence, many wholesale retail store owners are the very reason
their company eventually fails. Of course, with more experience and the ability to spot and address
problems before they get out of hand, business owners are more likely to avoid these challenges.
7. Economic Factors
The economy is cyclical, which means it periodically goes through low times. Wholesalers who are
unprepared for those times of economic recession are often caught off-guard financially. While the
economy isn’t something a individual company can change, business owners can prepare for those
difficult times through scenario training and financial planning

2. 8. Overexpansion
Overexpansion is similar to the issue of excessive overhead. While it may make sense in moderation, too
much too quickly can often bankrupt a business. Supply problems, logistic challenges, staffing issues,
and financing concerns are potential obstacles in expanding. Without adequate preparation and strategy,
the attempt to capture more of the market can quickly turn into a matter of survival.
The important idea within this top ten list is that all these reasons for a wholesale retail store’s failure can
be avoided. With adequate preparedness, as well as balancing the short-term challenges against the
long-term needs of the company, you can successfully navigate these obstacles and achieve the full
potential of your own wholesale company.
9. Customer Problems
Customer problems can range from your primary buyer being unhappy with your products to going out of
business without paying for a major shipment. Like fraud and disasters, companies don’t have much
control over their customers. Again, preventive planning is the key. Maintaining clear lines of
communication, reviewing customer profiles, and being quick to address customer concerns are all
excellent ways to keep a minor problem from turning into a major disaster.
10. Fraud
Fraud - by customers, employees, vendors, or partners - is an unfortunate fact in any industry. While
there is a degree of due diligence a company can perform, no one is able to avoid fraud altogether.
Similar to disaster planning, the best course of action is to have adequate insurance as well as policies
(such as a check and balance system) in place to avoid fraud and be ready to address it when it happens.
Why Retail Businesses Fail Part 2: Lack of "Level Five" Leadership
1. Jim Collins, in his book "Good to Great", introduced the concept of "level five leadership". According
to Mr. Collins; "The key to an organization becoming great is having a "Level Five Leader" - Someone
who blends genuine personal humility with intense professional will - leaders at the other four levels in the
hierarchy can produce high levels of success but not enough to elevate organizations from mediocrity to
sustained excellence".
2. This may sound conceptual or theoretical, but it is not. Many of the best retail executives are level four
leaders. They produce a burst of results for a short period then fade away.
3. Most retail executives are good sales people but bad business people. They can sell ice to an Eskimo
yet they do not know how to run a retail business. There is a fundamental difference between being a
retail professional and a business person.
4. Being a retail professional requires an understanding of all the nuances of retail. However, the ability
to run a successful retail business requires the application of certain universal business principles. Such
principles are absent from all of the failed or struggling retail organization because the leaderships in
those organization lack an understanding of those principles.
5. Tesco is the third most profitable business in the UK and the second most profitable retailer in the
world. Why is Tesco, a retailer, the third most profitable business in the UK? Tesco once had a "Level
Five Leader" who transformed an ordinary UK retail organization into a global retail giant.
6. The idea that retail executives are good sales people but bad business people might sound counter-
intuitive, therefore, let me expand on this concept with the following analogy.
7. Many accountants are really good at what they do as accountants. They can take one look at a
statement of accounts and tell whether it is accurate. However, many accounting businesses fail. Why do
accounting businesses fail when accountants are good money managers? It is because accountancy is a
profession and like most professions; it is completely different from a business.

3. 8. A similar case can be made about retail executives. Many retail CEOs and executives are expert
retailers who know the ins and outs of retail. They sleep and breathe retail. They took the time to learn
retail but did not take the time to learn the retail business; which is a major reason why many retail
businesses fail.
9. You can pluck a good business person from any business and make him a retail executive and he
will be able to perform better than most retail executives. The fundamentals of business are universal they
never change.
10. Let me expand on this point with the following examples:
11. Microsoft is not a successful company because they make the best software in the world. It is
successful because Bill Gates, a shrewd businessman, formed alliances with major corporations and
government institutions.
12. There were many search engines in existence before the arrival of Google. Why is Google more
successful than all of them? Google’s business model was and is better than the rest.
13. Facebook was not the first social media site yet Facebook dominates social media. Why?
Facebook has a better business model than the rest.
14. McDonalds sells hamburgers. Does anyone believe that McDonalds is successful because it makes
the best hamburger in the world? No way! McDonalds is the world’s leading fast food company because it
has the best business system in the world.
15. The point I tried to make with the above examples, (whether it is Microsoft, Google, Facebook or
McDonalds) it is not their products or services that made those companies the leaders in their industry
neither are they successful because of the industries in which they operate; they are successful because
of their business models and good leadership.
16. The CEO of Apple could go to any retail chain and make it as successful as Apple. Success in
business is not dependent on the industry. However, it is dependent on the following four key
components: 1. Good leadership. 2. Good talent. 3. Good system. 4. Good marketing system.
17. The reason why Tesco and Holland & Barrett are the third and fourth most profitable businesses in
the UK is because they have these four components in place. I did not say they are the third and fourth
most profitable retailers in the UK, I said they are the third and fourth most profitable businesses in the
UK.
18. Business success transcends industry it is dependent on:
19. Good leadership; Great people; Good system; Good marketing system. In most cases only "Level
Five Leaders" have the ability to develop these four components

4. Why Retail Businesses Fail Part 1: La Senza in Administration
Why Did La Senza Go Into Administration?
Lingerie specialist La Senza went into administration in the first week of 2012. It is amongst some 183 UK
retailers including: Barratts, Clinton Cards, Habitat, HMV, Focus DIY, JJB Sports, Jane Norman,
Mothercare, Oddbins, TJ Hughes and Thorntons that got into trouble in 2011. This is in addition to the
thousands of retailers that have already gone bust without making the headlines.
Coincidentally, just a week ago, I visited La Senza in the Trafford Centre, Manchester; to take photos of
bad visual merchandising examples for research for my forthcoming book on visual merchandising
display.
Why do many retailers get into trouble or go bust?
Let's read what a La Senza spokesperson had to say about why La Senza went into administration:
"Due to trading conditions in La Senza's high street locations and the overall macro environment which
are having an adverse effect on the company, the board of directors of La Senza has filed a notice of
intention to appoint administrators."
The UK's retail guru, Mary Portas, recently released her High Street revival report, commissioned by the
British Prime Minister David Cameron; in to why the UK High Street is at risk of becoming extinct.
According to her report, the main reason for the demise of the High Street was that "High Streets have
reached 'crisis point' with the rise of super-malls, out-of-town supermarkets and internet shopping".
This follows another report by Colliers CRE which highlighted the "downward spiral and degenerating or
failing" of the High Street.
The willingness of the British Prime Minister to get directly involved in the retail industry crisis outlines the
severity of the situation. However, the UK government is not alone in expressing concern for the retail
industry. The Australian government has also commissioned a report into the future of the Australian retail
industry.
Thousands of jobs depend on retail. Whenever, a retailer goes out of business, especially large retailers,
they leave a large hole in the labour market. Therefore it is understandable that the governments are
concerned.
Did La Senza and the other big retailers that are in trouble actually suffer because of the 'challenging
economic environment' or 'challenging trading conditions' to adopt the fancy language of retailers
themselves?
Is the UK High Street in danger of extinction because of reasons described by Mary Portas and the
Colliers CRE report?
I beg to differ.
The core problem with most retail businesses in the UK and in many developed countries is: they are ran
like non-profit organisations. The fundamental reason for the existence of any business is to make profit.
Any business that does not have profit as its core goal will either fail or languish in mediocrity.
It is true that businesses need to provide good customer service, take care of their employees and
support the community. However, businesses do not exist for those reasons, they exist solely to make
profit. It is only after they have achieved their core purpose for existence that they will be able to fulfil their
other responsibilities.

5. Let me qualify this statement to avoid becoming 'lost in translation'. I did not say businesses exist solely to
make money, I said profit. There is a big distinction between making money and making profit.
The retail industry is the only industry where increased sales is the key performance indicator. I am
writing this White Paper on Boxing Day; which is the day when most retailers make their biggest sales of
the year. The irony is that even though they will make their biggest sales today, it does not necessarily
mean that they will be making their biggest profit margin today.
When the dust has settled, and customers have returned home, as retailers tally the figures; they will fall
into the following categories:
- Profitable retailer.
- Break even retailer.
- Losses retailer.
How can retailers expect to make a profit by discounting their merchandise at 50% or 70%? Retail profit is
an average of 3%. Even the most profitable retailers make between 3-5% profit. However, the large
majority of retail profit margin is between 1.5-3%. Therefore, if a retailer is making a 3% profit margin and
they discount their merchandise by 50%, how much profit will they be making?
The peripheral reasons most retailers go bust are as follows:
- Lack of "level five" leadership.
- Lack of understanding of their target market.
- Lack of trained staff.
- Lack of skilled sales staff.
- Lack of product knowledge.
- Low wages.
- Bad customer service provision.
- Wrong loss prevention strategy.
La Senza went into administration because like most retailers it did not apply fundamental business
principles. It did not focus on profit, instead it was focused only on increasing sales. A company that
increases sales without increasing profit will not survive.
Article Source: http://EzineArticles.com/6808156

6. Why Best Buy is Going out of Business...Gradually
Tech 1/02/2012 @ 12:54AM
Electronics retailer Best Buy is headed for the exits. I can’t say when exactly, but my guess is that it’s
only a matter of time, maybe a few more years.
Consider a few key metrics. Despite the disappearance of competitors including Circuit City, the
company is losing market share. Its last earnings announcement disappointed investors. In 2011, the
company’s stock has lost 40% of its value. Forward P/E is a mere 6.23 (industry average is 10.20). Its
market cap down to less than $9 billion. Its average analyst rating, according to The Street.com, is a B-.
Those are just some of the numbers, and they don’t look good. They bear out a prediction in March from
the Wall Street Journal’s Heard on the Street column, which forecast “the worst is yet to come” for Best
Buy investors. With the flop of 3D televisions and the expansion of Apple’s own retail locations, there was
no killer product on the horizon that would lift it from the doldrums. Though the company accounts for
almost a third of all U.S. consumer electronics purchases, analysts noted, the company remains a ripe
target for more nimble competitors.
But the numbers only scratch the surface. To discover the real reasons behind the company’s decline,
just take this simple test. Walk into one of the company’s retail locations or shop online. And try, really
try, not to lose your temper.
I admit. I can’t do it. A few days ago, I visited a Best Buy store in Pinole, CA with a friend. He’s a
devoted consumer electronics and media shopper, and wanted to buy the 3D blu ray of “How to Train
Your Dragon,” which Best Buy sells exclusively. According to the company’s website, it’s backordered
but available for pickup at the store we visited. The item wasn’t there, however, and the sales staff had
no information.
But my friend decided to buy some other blu-ray discs. Or at least he tried to, until we were “assisted” by
a young, poorly groomed sales clerk from the TV department, who wandered over to interrogate us.
What kind of TV do you have? Do you have a cable service, or a satellite service? Do you have a triple
play service plan?
He was clearly—and clumsily–trying to sell some alternative. (My guess is CinemaNow, Best Buy’s
private label on-demand content service.) My friend politely but firmly told him he was not interested in
switching his service from Comcast. I tried to change the subject by asking if there was a separate bin for
3D blu rays; he didn’t know.
The used car style questions continued. “I have just one last question for you,” he finally said to my
friend. “How much do you pay Comcast every month?”
My friend is too polite. “How is that any of your business?” I asked him. “All right then,” he said, the fake
smile unaffected, “You folks have a nice day.” He slinked back to his pit.
As a sometime business school professor, I could just imagine the conversation with the TV department
manager the day before. “Corporate says we have to work on what’s called up-selling and cross-selling,”
the clerk was informed in lieu of actual training on either the products or effective sales. “Whenever you
aren’t with a customer, you need to be roaming the floor pushing our deal with CinemaNow. At the end of
the day, I want to know how many people you’ve approached.”
But this is hardly customer service. It’s actually getting in the way of a customer who’s trying to self-
service because there’s no one around who can answer a basic question about the store’s confusing
layout. It’s anti-service.

8. Going Bankrupt Gradually, then Suddenly
We left the store, my friend having made his purchase but both of us fuming. I was reminded of a line
from Ernest Hemingway’s “The Sun Also Rises.” One character asks another how he went bankrupt.
“Two ways. Gradually, then suddenly.” Best Buy, I thought, is doing the same, just as many big box
retailers have done in the last decade.
First comes the strategic bankruptcy, well in progress at Best Buy, where management’s sole focus is
improving some arbitrary metric from last quarter, even when doing so actually interferes with customers
trying to buy something else. The financial collapse comes later. But if history is any guide, the second
part, once it starts, will be quick.
As with many large retailers unable to cope with new channels and new consumer expectations, the
company will continue to sputter on fumes, slowing down bit by bit until one day it just stops moving.
Think of Elek-Tek, Virgin Megastores, or KB Toys. (See a non-exhaustive, nostalgia-inducing list of
recently-failed retailers over at Wikipedia.)
The new conventional wisdom says that big box retailers like Best Buy are going the way of the dinosaur.
Online giants, notably Amazon, are the future. Online retailers are more efficient, because they lack
physical locations, and so can offer better prices. Shopping online is also more convenient. On the web,
consumers can shop anywhere they are, day or night. (Amazon has a market cap of $80 billion and a P/
E of 91.)
Best Buy and other traditional retailers complain that Amazon can undercut them in prices because the
site doesn’t charge sales tax, and that Amazon customers use Best Buy as their showroom, taking
advantage of the extensive, well-stocked locations and knowledgeable staff to research products they
actually buy from someone else online.
Online competitors are certainly part of Best Buy’s problem, but not for the reasons it thinks. What’s
really going on is more basic. Best Buy just doesn’t understand its customers’ point of view.
More than a decade ago, in “Unleashing the Killer App,” I wrote that while transitioning to the Internet was
revolutionary for retailers, it was merely evolutionary for customers. “Ensure continuity for the customer,”
I said as one of my twelve rules for building killer apps, “not yourself.”
What I meant was that consumers easily adapt to alternative retail channels. Before the Internet, there
was catalog shopping and home shopping from television. For consumers, buying online was just the
next step in an obvious progression of more convenient ways to buy.
For brick-and-mortar retailers, however, the shift was jarring. Moving online required new thinking, new
management structures, and new strategies. It would also require integrated front and back-end
information systems. Customers would expect inventory to be transparent between the web and the
stores, and that specials and “exclusives” would be consistent across all channels. Whatever attributes
they associated with a retailer’s brand—whether price, quality, convenience, expertise, service—would
need to be translated to the online experience and enhanced.
To compete successfully against new online retailers, traditional retailers would also need to find ways to
transform the expensive liabilities of physical locations with limited hours and high labor and inventory
costs into assets that complemented rather than competed with the online experience.

9. Best Buy’s Wounds are Mostly Self-Inflicted
Many retailers have struggled to make the transition; some have fallen on their swords along the way. So
far, Best Buy fails on every measure. The company has its own website, of course, and offers customers
the opportunity to order online and pickup and return in-store. (At the Pinole store, there is a separate
line for pickups at the customer service desk, though it is staffed by the same people who handle returns
and other service problems. Lines are longer and slower than for in-store checkout.)
But the website doesn’t seem to be programmed for even basic inventory management. An article in the
Minneapolis Star Tribune, the company’s hometown newspaper, reported a few days before Christmas
that the company had only just informed some customers that online orders, some placed the day after
Thanksgiving, couldn’t be filled and were being cancelled. The out of stock items included the most
popular items, including TVs and iPads, “as well as other tablets, cameras, laptops, PS3 games and the
Nintendo Wii.”
The company issued a statement that read: “Due to overwhelming demand of hot product offerings on
BestBuy.com during the November and December time period, we have encountered a situation that has
affected redemption of some of our customers’ online orders.”
Let’s parse that sentence for a moment. The company “encountered a situation”—that is, it was a
passive victim of an external problem it couldn’t control, in this case, customers daring to order products it
acknowledges were “hot” buys. This happened, inconveniently for Best Buy, during “the November and
December period,” that is, the only months that matter to a retailer. For obvious reasons, the statement
ties itself in knots trying to avoid mentioning that the “situation” occurred during the holidays.
The situation that Best Buy “encountered” has “affected redemption” of some orders. Best Buy doesn’t fill
online orders, it seems. Rather, customers “redeem” them. So it’s the customers, not Best Buy, who
have the problem. And those customers haven’t been left hanging; they’ve only been “affected” in efforts
to “redeem” their orders. It’s not as if the company did anything wrong, or, indeed, anything at all.
It’s all so passive. It’s also a transparent and truly feeble pack of lies. Here’s what the honest and
appropriate release would have said: “Due to poor inventory management and sales forecasting of the
most popular products during our key sales season, we can’t fill orders we promised to fill weeks ago in
time for Christmas.”
There’s a little more to the Best Buy’s press release: “We are very sorry for the inconvenience this has
caused, and we have notified the affected customers.”
Again, note the use of the passive voice—”this” refers to the “situation” that Best Buy “encountered.” The
“situation,” not Best Buy’s poor operations, “has caused” inconvenience to customers. It’s not something
Best Buy did wrong. It’s like they’re reporting the weather; something utterly out of their control about
which the company is a mere observer. They’ve “notified the affected customers” despite, it seems, no
sense of obligation to do so, let alone to find a solution to a problem entirely of the company’s own
creation. How sorry are they, do you think?
Again, here’s my rewrite: “Three days before Christmas, too late for the customers to make alternative
arrangements, we are just now letting our would-be customers know. We have no excuse for such
amateur behavior.”
According to the article, the company refused to answer any questions beyond the release. Here are a
few: How many customers were affected? What specific products were involved? How has the company
failed so badly to perform to even the lowest standards imaginable for a retailer at Christmas? Did the
company expect anyone would be fooled by the ridiculously obtuse statement of non-apology?

10. It’s Not Amazon that’s Killing Best Buy
—But Best Buy Could Certainly Learn How it’s Done Right
It’s not competition from Amazon that’s killing Best Buy here; Best Buy is doing most of the damage to
itself. But let’s compare the two to see how retailing–online or otherwise–is done correctly.
First, it’s hard to imagine anything so pathetic happening at Amazon, and even harder to imagine the
company failing to own up to its errors. Amazon does not take orders it cannot fill, and it does not wait
until the last minute to cancel them without offering any kind of solution.
Amazon lives and breathes the customer’s point-of-view. It completely engineers its business practices,
its systems, and its people to support it. When they make a mistake, they admit it and they fix it.
Immediately. Once, when I had a problem with a new TV that turned out to be a manufacturing flaw, the
company begged me to let them pick up the unit, send something else, and install it for me. That was
more solution than I needed, let alone asked for.
It’s not just Amazon’s prices that are better, in other words. Its customer service is superior in every way.
And unlike traditional retailers, it recognizes its own potential disadvantages and innovates ways to
overcome them. The company has no retail locations to pick up merchandise, but it ships instantly, often
for free. It has no on-site sales experts to answer questions, but the pages of its products are filled with
videos, FAQs, and customer reviews and answers.
The company keeps track of all previous orders, and uses its database to make helpful recommendations
of other purchases. Phone support is instant, responsive, and knowledgeable. Returns are simple and
unburdened by restocking fees and other gotchas. Inventory is precisely managed in a single system that
spans all distribution points and third party partners.
Best Buy could have done all of this years ago, and done it better. It had decades of experience in retail,
in customer service, in distribution, in forecasting, in marketing and sales. It had, one presumes,
computer systems that could have been upgraded to integrate with a new online front end. It had
expertise in the electronic products it sells, and potent leverage over key manufacturers to ensure
favorable terms and access.
(Years ago, the CEO of a leading appliance manufacturer told me he felt obliged to keep a low profile on
the Web or face the wrath of his main retail partner. Not many years later, the partner, Circuit City, was
out of business. Oops.)
But Best Buy squandered all of those assets. And now, along with many of its big box peers, the
company is caught in a death spiral. Not because of new competitors who, fairly or unfairly, are eating its
lunch. These wounds are self-inflicted.
What is management so busy with that it can’t fill orders for the most popular products during the most
important weeks of the year? Since 2009, CEO Brian Dunn has been busy pursuing a strategy of
protecting market share over profit. In the quarter ending November 30, 2011, store sales increased 1%,
the first increase in two years. Margins, however, sank–net income dropped by 29%.
The annual report is largely silent on initiatives; the company’s website says only that “To meet the unique
product and service needs of our customers, our stores and operating models are being transformed to
shift our focus from product-centric to customer-centric.” If only.
The company doesn’t report, of course, on customer satisfaction. But there’s a postscript to my personal
story. In part because he was distracted by the “expert” sales staff prying into his personal finances
instead of actually providing assistance, my friend mistakenly purchased the wrong DVD of a NASA
documentary—he accidentally got one he already had. We returned the next day to exchange it for the

11. correct one. Sorry, said the customer service staff, DVDs are “software” and can’t be returned or
exchanged once sold. No exceptions.
True enough, the return “policy”—several hundred words printed on the back of the sales receipt—says
that software cannot be returned. Why not? It’s our policy.
But I already have this one, my friend said. “We can’t help you.”
Not to beat a nearly-dead retailer, but does Best Buy know that Amazon not only allows easy return or
exchange for DVDs without restrictions, the company will even buy back ones you’re finished with? And
even if the customer is outside the return window or is otherwise technically not entitled to do what she’s
asking to do, the company bends over backwards to bend its policies in the interest of happy customers
and the on-going customer relationship.
Whistling in the Dark
I’m not shilling for Amazon or any other successful online retailer here. My point is much more basic.
Amazon neither invented nor appropriated its basic strategies from Best Buy or anyone else. It simply
does what consumers want. Best Buy does what would be most convenient for the company for
consumers to want but don’t, then crosses its fingers and prays. That’s not a strategy–or not a winning
strategy, in any case, now that retail consumers aren’t stuck with the store closest to home.
There’s no magic to retailing “hot” products and doing so at a profit. Efficient inventory and distribution,
managing customer relationships for the long term, competitive pricing, pre and post-sales support for
technically complex items: these are the most basic elements of competitive advantage for a retailer that
actually wants to stay in business, now but in the past as well. Most of what Amazon does right has
nothing to do with technology or the Internet at all.
Instead, Best Buy is futilely focused on the mathematics of market share. It’s groping with questionable
expansion in Europe and China, and with services such as its recently-acquired Geek Squad subsidiary.
(It also bought Napster in 2008, then sold it to Rhapsody this year for an undisclosed amount.)
What else has the company got? Management, at least, still believes it has competitive advantages–
advantages that even make it attractive to shareholders. According to the company’s most recent annual
report,
We believe our dedicated and knowledgeable people, store and online experience, broad product
assortment, distinct store formats and brand marketing strategies differentiate us from our competitors by
positioning our stores and Web sites as the preferred destination for new technology and entertainment
products in a fun and informative shopping environment.”
There’s just one problem. Not one word of that, at least in my experience, is true. Their “people” are not
knowledgeable; they are annoying. The store “format” is entirely generic; perhaps a little confusing. The
stores and Websites are not “preferred destinations”—they are destinations, at best, of inertia, or in the
case of exclusives, destinations of the only resort. The “shopping environment” is the opposite of fun and
informative. It’s depressing and humiliating, as in “I can’t believe I had to go to Best Buy to get this.”
What you’re hearing is the sound of a once-leading retailer whistling in the dark. The only question is
whether Best Buy management and investors actually know that, or whether it’s obvious only to
consumers. My guess is that they don’t “believe” a word of this, but don’t want to admit it to themselves.
(It’s clear from the Christmas debacle that they wouldn’t feel obliged to admit it to anyone else.)
Best Buy is living in the corporate equivalent of what psychologists call a state of denial. In business,
that’s usually the first step in a failure that ends with a spectacular collapse.
Gradually, then suddenly.