Worldwide electronics retailer Best Buy recently announced the appointment of Hubert Joly as the company’s Chief Executive Officer. Joly, the former CEO of Carlson, replaces interim CEO G. Mike Mikan who had occupied the position since Brian Dunn resigned in April. Following news of Joly’s hiring at Best Buy, the company’s stock prices have rapidly declined, reaching a low of $18.74 on the afternoon of Monday, August 20th. Additionally, Best Buy founder and former chairman, Richard Schulze, has offered to purchase the company and return it to private ownership for over $8 billion.
The future of Best Buy is still somewhat uncertain, but with dwindling sales revenues due to exclusively online competitors such as Amazon, major restructuring efforts will be necessary to return the brand to its former profitability.
Best Buy’s most notable online competitor, Amazon.com, posted upwards of $48 billion in revenue in 2011. Although Best Buy’s revenue in 2011 was $50 billion, Amazon’s lower operating costs actually made the company more profitable. Best Buy should follow their example and place a stronger emphasis on its E-Commerce and mobile platforms, as they will continue to rise going forward. Additionally, Best Buy should enhance its digital marketing efforts and attempt to build a much larger presence in the online marketplace rather than focusing primarily on its “brick-and-mortar” locations.
However, the most important part of Best Buy’s revitalization strategy should be an increased focus on re-designing its proprietary mobile application and utilizing it as a cornerstone of the brand’s technological advancement. Although mobile E-Commerce is still a few years away from its zenith, it is crucial to begin developing a stronger mobile presence in order to remain competitive within the online retail market going forward.
For Best Buy, it is essential that the company’s new CEO understands the online marketplace and the value of a solid mobile and Web presence. The months ahead will be a very critical and transitional period for Best Buy and with a new CEO and online marketing and sales strategy, the company could emerge as a viable threat to Amazon’s dominance in the E-Commerce arena.