Best Buy’s founder wants to return as savior
Kai Ryssdal: The Marketplace stock o’ the day today is ticker symbol BBY. Best Buy. Up 13 and a third percent, on news the founder and former chairman wants to take his company and go home.
Richard Schulze left Best Buy back in June, not under the best of circumstances. He still owns 20 percent of it. And today he said he wants to buy the rest for as much as $8.8 billion. Schulze says he’s got a plan to deal with the company’s challenges — which are not small. He didn’t give any specifics, though, so we asked our senior business correspondent Bob Moon to come up with a couple.
Bob Moon: It was only two months ago that Schulze resigned as Best Buy’s chairman, so Wedbush Securities analyst Michael Pachter is skeptical that he’s just now developed a plan to save the company.
Michael Pachter: I find it very difficult to believe that he had an epiphany only since leaving the board.
Interim CEO Mike Mikan has already announced his own restructuring plan: Smaller stores to squeeze more profit from less floor space. At the same time, he’s vowed to beef up Best Buy’s online sales.
Mike Mikan: We must meet people where they are, and not expect them to come to us. That means we must have a world class e-commerce capability.
Best Buy has been hit by stiff competition from the likes of Amazon, but Pachter says it’s facing a Catch-22. He says brick-and-mortar overhead adds about 10 percent to prices, and it’ll have a tough time competing with itself online.
Pachter: Unless Best Buy is prepared to offer you exactly the same product at a 10 percent lower price online, which again would exacerbate their demise, I don’t know how that is something that’ll solve their problem at all.
Pachter says his own experience painfully illustrates the shifting retail sands. He says he bought his kids some flat-screen TVs at Best Buy one recent weekend, only to have them ask why he didn’t get them cheaper online. He explained that he wanted to take them home right away.
Pachter: And they said, “Well, doesn’t Amazon deliver on Saturday, and don’t they deliver same-day?” And I said, “Not yet, but when they do, I’ll never go to Best Buy again.”
Indeed, Pachter says, Amazon is gearing up in some areas to be able to provide same-day delivery. And he says Best Buy’s troubles will only multiply when that happens.
I’m Bob Moon for Marketplace.
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