Technologizer

Another Way to Save Best Buy: Make It More like Costco

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Reuters

President Barack Obama shops at an Alexandria, Va. Best Buy on December 21st, 2011.

Just about everybody, it seems, is full of helpful advice for Best Buy on how it can fix its business. I provided my suggestions back in March. (That was before the company’s CEO, Brian Dunn, resigned under mysterious circumstances.) And now Slate’s Farhad Manjoo has chimed in.

Basically, he thinks the company should downsize to smaller stores that ditch the whole idea of an extensive selection in any one product category, and instead stock far few products and provide better advice about them. There’s no point in offering variety, he says, when products have gotten so similar:

It’s not just televisions. We live in an age of commodity electronics, where most gadgets are more or less interchangeable. You aren’t likely to notice any major differences between a product made by Samsung versus one made by Toshiba—they’ll both likely be made out of the same parts, in the same way, and perhaps in the same factories. Given these similarities, if you spend more than 10 minutes comparing different models of any type of gadget, you’re doing it wrong.

(That strikes me as an extremist stance: there’s plenty of difference between a Samsung laptop and a Toshiba laptop, or between a Nikon camera and a Sony camera — enough that I’m usually glad when I take the time to do my homework, and often regretful when I don’t.)

Manjoo says that the consequences if Best Buy ignores his recommendations could be dire:

Shrinking its selection would improve this situation—the fewer products it sells, the easier it would be for Best Buy’s employees to become experts about all of the goods on offer. It would also make it easier for customers to find stuff. Still, the transformation I’m calling for is radical—it would involve massive physical restructuring, as well as a program to re-educate it’s the company’s staff. It won’t be easy. It’s not guaranteed to work. On the other hand, if Best Buy sticks to its current course, it’s certain to die. Given the alternative, the company has no choice but to make a fundamental change.

I got to thinking about his strategy, and it occurred to me that there’s another possible model for a Best Buy turnaround: it could be more like Costco, a big-box retailer which appears to be doing just fine.

Costco offers a tremendous variety of product categories — on one trip, you can buy a crate of Grape-Nuts, a box set of Harry Potter movies, new tires, a wicker sofa and a laser printer. But within any one category, it usually offers hardly any choice at all. It offers a few products — or sometimes one product — but the pricing is aggressive, and the products are generally good. That’s in line with Manjoo’s advice.

Where Costco veers from the Manjoo Solution is in customer service. It hardly offers it: instead, you go in, put the product you want in a shopping cart — even if it’s a 55″ TV — and pay and leave. It’s a great option for self-sufficient shoppers, and it’s a big reason why the company can keep its prices so low.

So what if Best Buy went the Costco route and became a technology warehouse store? It could stop stocking a gazillion camcorders and instead carry three or four well-rounded models which it could buy in vast quantities and sell at deeply-discounted prices. It could put everything out on shelves, which would eliminate one major shopping hassle: it’s often tough to find anyone to fetch the product you want. It could quit pushing extended warranties and drop any pretense that the “blue shirts” are technology wizards.

I’m not saying it would guarantee a recovery for the once-mighty retailer. But a store like that would appeal more to me than its current incarnation does. Would you shop at Best Buy if it went no-frills?

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