Best Buy: Going down the Circuit City road?

Today’s Retail Wire discussion ought to provoke a lot of conversation. Best Buy is making some payroll and staffing moves that remind a few observers of the mistakes that helped bring about the demise of Circuit City. Best Buy may feel that its principal competitor has left the stage, so it’s free to make some changes in its store…but be careful when your brand positioning is built in large part on customer service:

This move puts Best Buy in a tough position. Economic reality dictates cost-cutting moves at headquarters and in the field, as with many other retailers trying to protect shareholder value in a demand slump. But history is a good lesson — not only Circuit City but also Home Depot under Nardelli — so Best Buy has to be extremely careful here. A short-sighted and less than surgical approach to cost-cutting will be just as visible to the consumer as what Circuit City did, especially in a company building its marketing position on good service. And the consequences for a demoralized team are high unless management makes its case internally, not just to outside stakeholders and observers.


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