Best Buy CEO Fires Back at Harsh Critics

Brian Dunn acknowledged some of Best Buy's shortcomings but refuted the idea that the company may gradually be going out of business. Comments from online readers, however, echoed some of the complaints made by critics-namely, that of poor customer service.

Media coverage critical of Best Buy Company, Inc.-including a recent Forbes report that suggested that the Richfield-based company may be slowly going out of business-prompted a public response from the company's chief executive.

The Forbes story, titled “Why Best Buy Is Going Out of Business . . . Gradually,” points to several indicators that the electronics retailer may be on its way out: the failure of big-box competitors, loss of market share as customers increasingly buy online, and disappointing financials. But the report claims that poor customer experience is at the core of the retailer's problems.

The Forbes column was published less than two weeks after a New York Times blog also took aim at Best Buy, suggesting that the retailer is “getting a reputation as a showroom for Amazon; you kick the tires on a device at the store before going home and ordering it online.” It too criticized the retailer's customer service.

In a lengthy online response, Best Buy CEO Brian Dunn agreed with a couple of the critics' accusations. Regarding the company's inability to fill some holiday orders, for example, he said that the problem “was our fault, and it's not representative of how we EVER want to treat our customers,” adding that the company is “truly sorry” and is “working diligently to make sure it doesn't happen again.”

He also said that the company has received “fair criticism” regarding the speed at which it is adapting its business model. But he said that examples of positive changes include the launch of Best Buy Marketplace, through which the company allows vetted third parties to sell items on its Web site.

Dunn contested the notion that the Internet has made physical stores irrelevant, adding that “consumers continue to value the experience of shopping in stores.”

He also dismissed the idea that the company may be dying: “Finally, there are those who question the validity of Best Buy's business model,” Dunn wrote. “This misguided perspective is especially troubling for me, because it blatantly and recklessly ignores overwhelming evidence to the contrary.” He wrote that the company generated more than $2.6 billion in cash flows and reported positive operating income during the first three quarters of the fiscal year.

In conclusion, Dunn wrote that Best Buy, as a large company, expects to receive some criticism, “but this is one of those times when I felt it was necessary not only to acknowledge our shortcomings, but to set the record straight on issues where facts are being obscured by rhetoric.” (To read Dunn's entire message, click here.)

Many reader comments posted below Dunn's response, however, echoed the customer complaints outlined in the Forbes column. For example, readers voiced their irritation with Best Buy workers' excessive pitches to sell added services like warranties, product upgrades, or credit cards.

Even some commenters who identified themselves as Best Buy employees complained about the company's customer service model. One, who claimed to have worked for Best Buy for “many, many years,” cited positive changes at the company, including the introduction of Best Buy Mobile, but cited frustration with demands to “up-sell” to customers and “push the Best Buy Card down their throats until they agree.”

“These sales tactics are not of a company striving for success and they do not make me proud to work for the company,” the anonymous commenter wrote.

Another person criticized a lack of worker training: “Employees who don't know anything about computers should not be working in the computer section. Many is the time when I or a friend have been asking an associate about the difference between two electronic products, and all the associate can do is look at the tags (as if we couldn't read).”

While the bulk of the comments detailed poor customer service experiences at Best Buy stores, some lauded Dunn's decision to speak out. “As a shareholder, I appreciate the open mind from Brian,” one anonymous commenter wrote, adding that Dunn's post and resulting comments from those who identified themselves as employees prove that the company has a culture of open-mindedness.

Another commenter thanked Dunn for his response, adding that he or she has never encountered problems shopping at Best Buy. “If someone tries to do their job and offer me protection plans or additional service I just let them know I am not interested,” the individual wrote. “Saying you are getting harassed is pretty ridiculous.”

The author of the original Forbes column published a follow-up story on Monday, refuting several of the points made by Dunn. He also wrote that the more than 2.3 million page views and nearly 1,000 comments generated by the original column indicate that the complaints outlined in the article are shared by many.

Best Buy is Minnesota's third-largest public company based on revenue, which totaled $50.3 billion for the fiscal year that ended in February 2011. For the most recent fiscal quarter, which ended November 26, net income fell 29 percent to $154 million. The company on Friday said that same-store sales during December were down 1.2 percent, but it reaffirmed its full-year earnings guidance of $3.35 to $3.65 per share.