Why retail stores fail
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Why retail stores fail Document Transcript

  • 1. The Top 10 Reasons Wholesale Retail Stores FailWhy Retail Stores Fail and How to Ensure That You Dont!From Karen Waksman, former About.com GuideIt’s important to study success, but sometimes it’s just as insightful to study failures.Whether you are considering starting your own wholesale retail store or have already established it, thislist of the top ten reasons for failure - and what you can do to avoid them - will help you keep yourbusiness on the path to success.1. NeglectEntrepreneurs are often visionaries, which is great for creating a company. However, after the initialchallenge, many company founders look toward the next one. Without clear direction and involvementfrom its leader(s), a company will soon go off course. Like anything else, a company requires carefulmaintenance to remain at peak performance.2. DisastersNatural and man-made disasters often deal death-blows to companies, such as floods or fires. While it’sdifficult to avoid such disasters, company management can insure it carries adequate insurance and hasa plan for emergency scenarios.3. Access to CapitalIn business, finances are a often a paradox - it takes money to make money. While some companies areable to start-up with little capital, they often reach a point where they need additional financing to continueoperations. Without those funds available, they are unable to meet their day-to-day expenses. Securingaccess to capital before the company needs it is often the difference between success and insolvency.4. OverheadIt’s important to study success, but sometimes it’s just as insightful to study failure. Whether you areconsidering starting your own wholesale retail store or have already established it, this list of the top tenreasons for failure - and what you can do to avoid them - will help you keep your business on the path tosuccess.5. Poor SalesSales, of course, are the life of any business and without them, the business soon flounders. Somecauses of poor sales, such as economic factors listed previously, are out of the hands of companyleadership. However, many of the reasons for poor sales can be directly traced to management. Forinstance, if changes in customer preferences and the market in general are ignored, sales will suffer.While there is no way to guarantee sales, managers can be proactive and responsive to sales trends.6. Management/Leadership ProblemsOf the ten reasons listed, this is the one that is completely in the hands of the company’s owner(s). Whilemany people are great entrepreneurs - able to start a company from just an idea - these same peoplesometimes aren’t ready for the management issues they face as the company matures. Without priorexperience or simply because of incompetence, many wholesale retail store owners are the very reasontheir company eventually fails. Of course, with more experience and the ability to spot and addressproblems before they get out of hand, business owners are more likely to avoid these challenges.7. Economic FactorsThe economy is cyclical, which means it periodically goes through low times. Wholesalers who areunprepared for those times of economic recession are often caught off-guard financially. While theeconomy isn’t something a individual company can change, business owners can prepare for thosedifficult times through scenario training and financial planning
  • 2. 8. OverexpansionOverexpansion is similar to the issue of excessive overhead. While it may make sense in moderation, toomuch too quickly can often bankrupt a business. Supply problems, logistic challenges, staffing issues,and financing concerns are potential obstacles in expanding. Without adequate preparation and strategy,the attempt to capture more of the market can quickly turn into a matter of survival.The important idea within this top ten list is that all these reasons for a wholesale retail store’s failure canbe avoided. With adequate preparedness, as well as balancing the short-term challenges against thelong-term needs of the company, you can successfully navigate these obstacles and achieve the fullpotential of your own wholesale company.9. Customer ProblemsCustomer problems can range from your primary buyer being unhappy with your products to going out ofbusiness without paying for a major shipment. Like fraud and disasters, companies don’t have muchcontrol over their customers. Again, preventive planning is the key. Maintaining clear lines ofcommunication, reviewing customer profiles, and being quick to address customer concerns are allexcellent ways to keep a minor problem from turning into a major disaster.10. FraudFraud - by customers, employees, vendors, or partners - is an unfortunate fact in any industry. Whilethere is a degree of due diligence a company can perform, no one is able to avoid fraud altogether.Similar to disaster planning, the best course of action is to have adequate insurance as well as policies(such as a check and balance system) in place to avoid fraud and be ready to address it when it happens.Why Retail Businesses Fail Part 2: Lack of "Level Five" Leadership 1. Jim Collins, in his book "Good to Great", introduced the concept of "level five leadership". Accordingto Mr. Collins; "The key to an organization becoming great is having a "Level Five Leader" - Someonewho blends genuine personal humility with intense professional will - leaders at the other four levels in thehierarchy can produce high levels of success but not enough to elevate organizations from mediocrity tosustained excellence". 2. This may sound conceptual or theoretical, but it is not. Many of the best retail executives are level fourleaders. They produce a burst of results for a short period then fade away. 3. Most retail executives are good sales people but bad business people. They can sell ice to an Eskimoyet they do not know how to run a retail business. There is a fundamental difference between being aretail professional and a business person. 4. Being a retail professional requires an understanding of all the nuances of retail. However, the abilityto run a successful retail business requires the application of certain universal business principles. Suchprinciples are absent from all of the failed or struggling retail organization because the leaderships inthose organization lack an understanding of those principles. 5. Tesco is the third most profitable business in the UK and the second most profitable retailer in theworld. Why is Tesco, a retailer, the third most profitable business in the UK? Tesco once had a "LevelFive Leader" who transformed an ordinary UK retail organization into a global retail giant. 6. The idea that retail executives are good sales people but bad business people might sound counter-intuitive, therefore, let me expand on this concept with the following analogy. 7. Many accountants are really good at what they do as accountants. They can take one look at astatement of accounts and tell whether it is accurate. However, many accounting businesses fail. Why doaccounting businesses fail when accountants are good money managers? It is because accountancy is aprofession and like most professions; it is completely different from a business.
  • 3. 8. A similar case can be made about retail executives. Many retail CEOs and executives are expertretailers who know the ins and outs of retail. They sleep and breathe retail. They took the time to learnretail but did not take the time to learn the retail business; which is a major reason why many retailbusinesses fail. 9. You can pluck a good business person from any business and make him a retail executive and hewill be able to perform better than most retail executives. The fundamentals of business are universal theynever change. 10. Let me expand on this point with the following examples: 11. Microsoft is not a successful company because they make the best software in the world. It issuccessful because Bill Gates, a shrewd businessman, formed alliances with major corporations andgovernment institutions. 12. There were many search engines in existence before the arrival of Google. Why is Google moresuccessful than all of them? Google’s business model was and is better than the rest. 13. Facebook was not the first social media site yet Facebook dominates social media. Why?Facebook has a better business model than the rest. 14. McDonalds sells hamburgers. Does anyone believe that McDonalds is successful because it makesthe best hamburger in the world? No way! McDonalds is the world’s leading fast food company because ithas the best business system in the world. 15. The point I tried to make with the above examples, (whether it is Microsoft, Google, Facebook orMcDonalds) it is not their products or services that made those companies the leaders in their industryneither are they successful because of the industries in which they operate; they are successful becauseof their business models and good leadership. 16. The CEO of Apple could go to any retail chain and make it as successful as Apple. Success inbusiness is not dependent on the industry. However, it is dependent on the following four keycomponents: 1. Good leadership. 2. Good talent. 3. Good system. 4. Good marketing system. 17. The reason why Tesco and Holland & Barrett are the third and fourth most profitable businesses inthe UK is because they have these four components in place. I did not say they are the third and fourthmost profitable retailers in the UK, I said they are the third and fourth most profitable businesses in theUK. 18. Business success transcends industry it is dependent on: 19. Good leadership; Great people; Good system; Good marketing system. In most cases only "LevelFive Leaders" have the ability to develop these four components
  • 4. Why Retail Businesses Fail Part 1: La Senza in AdministrationWhy Did La Senza Go Into Administration?Lingerie specialist La Senza went into administration in the first week of 2012. It is amongst some 183 UKretailers including: Barratts, Clinton Cards, Habitat, HMV, Focus DIY, JJB Sports, Jane Norman,Mothercare, Oddbins, TJ Hughes and Thorntons that got into trouble in 2011. This is in addition to thethousands of retailers that have already gone bust without making the headlines.Coincidentally, just a week ago, I visited La Senza in the Trafford Centre, Manchester; to take photos ofbad visual merchandising examples for research for my forthcoming book on visual merchandisingdisplay.Why do many retailers get into trouble or go bust?Lets read what a La Senza spokesperson had to say about why La Senza went into administration:"Due to trading conditions in La Senzas high street locations and the overall macro environment whichare having an adverse effect on the company, the board of directors of La Senza has filed a notice ofintention to appoint administrators."The UKs retail guru, Mary Portas, recently released her High Street revival report, commissioned by theBritish Prime Minister David Cameron; in to why the UK High Street is at risk of becoming extinct.According to her report, the main reason for the demise of the High Street was that "High Streets havereached crisis point with the rise of super-malls, out-of-town supermarkets and internet shopping".This follows another report by Colliers CRE which highlighted the "downward spiral and degenerating orfailing" of the High Street.The willingness of the British Prime Minister to get directly involved in the retail industry crisis outlines theseverity of the situation. However, the UK government is not alone in expressing concern for the retailindustry. The Australian government has also commissioned a report into the future of the Australian retailindustry.Thousands of jobs depend on retail. Whenever, a retailer goes out of business, especially large retailers,they leave a large hole in the labour market. Therefore it is understandable that the governments areconcerned.Did La Senza and the other big retailers that are in trouble actually suffer because of the challengingeconomic environment or challenging trading conditions to adopt the fancy language of retailersthemselves?Is the UK High Street in danger of extinction because of reasons described by Mary Portas and theColliers CRE report?I beg to differ.The core problem with most retail businesses in the UK and in many developed countries is: they are ranlike non-profit organisations. The fundamental reason for the existence of any business is to make profit.Any business that does not have profit as its core goal will either fail or languish in mediocrity.It is true that businesses need to provide good customer service, take care of their employees andsupport the community. However, businesses do not exist for those reasons, they exist solely to makeprofit. It is only after they have achieved their core purpose for existence that they will be able to fulfil theirother responsibilities.
  • 5. Let me qualify this statement to avoid becoming lost in translation. I did not say businesses exist solely tomake money, I said profit. There is a big distinction between making money and making profit.The retail industry is the only industry where increased sales is the key performance indicator. I amwriting this White Paper on Boxing Day; which is the day when most retailers make their biggest sales ofthe year. The irony is that even though they will make their biggest sales today, it does not necessarilymean that they will be making their biggest profit margin today.When the dust has settled, and customers have returned home, as retailers tally the figures; they will fallinto the following categories: - Profitable retailer. - Break even retailer. - Losses retailer.How can retailers expect to make a profit by discounting their merchandise at 50% or 70%? Retail profit isan average of 3%. Even the most profitable retailers make between 3-5% profit. However, the largemajority of retail profit margin is between 1.5-3%. Therefore, if a retailer is making a 3% profit margin andthey discount their merchandise by 50%, how much profit will they be making?The peripheral reasons most retailers go bust are as follows: - Lack of "level five" leadership. - Lack of understanding of their target market. - Lack of trained staff. - Lack of skilled sales staff. - Lack of product knowledge. - Low wages. - Bad customer service provision. - Wrong loss prevention strategy.La Senza went into administration because like most retailers it did not apply fundamental businessprinciples. It did not focus on profit, instead it was focused only on increasing sales. A company thatincreases sales without increasing profit will not survive.Article Source: http://EzineArticles.com/6808156
  • 6. Why Best Buy is Going out of Business...GraduallyTech 1/02/2012 @ 12:54AMElectronics retailer Best Buy is headed for the exits. I can’t say when exactly, but my guess is that it’sonly a matter of time, maybe a few more years.Consider a few key metrics. Despite the disappearance of competitors including Circuit City, thecompany is losing market share. Its last earnings announcement disappointed investors. In 2011, thecompany’s stock has lost 40% of its value. Forward P/E is a mere 6.23 (industry average is 10.20). Itsmarket cap down to less than $9 billion. Its average analyst rating, according to The Street.com, is a B-.Those are just some of the numbers, and they don’t look good. They bear out a prediction in March fromthe Wall Street Journal’s Heard on the Street column, which forecast “the worst is yet to come” for BestBuy investors. With the flop of 3D televisions and the expansion of Apple’s own retail locations, there wasno killer product on the horizon that would lift it from the doldrums. Though the company accounts foralmost a third of all U.S. consumer electronics purchases, analysts noted, the company remains a ripetarget for more nimble competitors.But the numbers only scratch the surface. To discover the real reasons behind the company’s decline,just take this simple test. Walk into one of the company’s retail locations or shop online. And try, reallytry, not to lose your temper.I admit. I can’t do it. A few days ago, I visited a Best Buy store in Pinole, CA with a friend. He’s adevoted consumer electronics and media shopper, and wanted to buy the 3D blu ray of “How to TrainYour Dragon,” which Best Buy sells exclusively. According to the company’s website, it’s backorderedbut available for pickup at the store we visited. The item wasn’t there, however, and the sales staff hadno information.But my friend decided to buy some other blu-ray discs. Or at least he tried to, until we were “assisted” bya young, poorly groomed sales clerk from the TV department, who wandered over to interrogate us.What kind of TV do you have? Do you have a cable service, or a satellite service? Do you have a tripleplay service plan?He was clearly—and clumsily–trying to sell some alternative. (My guess is CinemaNow, Best Buy’sprivate label on-demand content service.) My friend politely but firmly told him he was not interested inswitching his service from Comcast. I tried to change the subject by asking if there was a separate bin for3D blu rays; he didn’t know.The used car style questions continued. “I have just one last question for you,” he finally said to myfriend. “How much do you pay Comcast every month?”My friend is too polite. “How is that any of your business?” I asked him. “All right then,” he said, the fakesmile unaffected, “You folks have a nice day.” He slinked back to his pit.As a sometime business school professor, I could just imagine the conversation with the TV departmentmanager the day before. “Corporate says we have to work on what’s called up-selling and cross-selling,”the clerk was informed in lieu of actual training on either the products or effective sales. “Whenever youaren’t with a customer, you need to be roaming the floor pushing our deal with CinemaNow. At the end ofthe day, I want to know how many people you’ve approached.”But this is hardly customer service. It’s actually getting in the way of a customer who’s trying to self-service because there’s no one around who can answer a basic question about the store’s confusinglayout. It’s anti-service.
  • 7. Going Bankrupt Gradually, then SuddenlyWe left the store, my friend having made his purchase but both of us fuming. I was reminded of a linefrom Ernest Hemingway’s “The Sun Also Rises.” One character asks another how he went bankrupt.“Two ways. Gradually, then suddenly.” Best Buy, I thought, is doing the same, just as many big boxretailers have done in the last decade.First comes the strategic bankruptcy, well in progress at Best Buy, where management’s sole focus isimproving some arbitrary metric from last quarter, even when doing so actually interferes with customerstrying to buy something else. The financial collapse comes later. But if history is any guide, the secondpart, once it starts, will be quick.As with many large retailers unable to cope with new channels and new consumer expectations, thecompany will continue to sputter on fumes, slowing down bit by bit until one day it just stops moving.Think of Elek-Tek, Virgin Megastores, or KB Toys. (See a non-exhaustive, nostalgia-inducing list ofrecently-failed retailers over at Wikipedia.)The new conventional wisdom says that big box retailers like Best Buy are going the way of the dinosaur.Online giants, notably Amazon, are the future. Online retailers are more efficient, because they lackphysical locations, and so can offer better prices. Shopping online is also more convenient. On the web,consumers can shop anywhere they are, day or night. (Amazon has a market cap of $80 billion and a P/E of 91.)Best Buy and other traditional retailers complain that Amazon can undercut them in prices because thesite doesn’t charge sales tax, and that Amazon customers use Best Buy as their showroom, takingadvantage of the extensive, well-stocked locations and knowledgeable staff to research products theyactually buy from someone else online.Online competitors are certainly part of Best Buy’s problem, but not for the reasons it thinks. What’sreally going on is more basic. Best Buy just doesn’t understand its customers’ point of view.More than a decade ago, in “Unleashing the Killer App,” I wrote that while transitioning to the Internet wasrevolutionary for retailers, it was merely evolutionary for customers. “Ensure continuity for the customer,”I said as one of my twelve rules for building killer apps, “not yourself.”What I meant was that consumers easily adapt to alternative retail channels. Before the Internet, therewas catalog shopping and home shopping from television. For consumers, buying online was just thenext step in an obvious progression of more convenient ways to buy.For brick-and-mortar retailers, however, the shift was jarring. Moving online required new thinking, newmanagement structures, and new strategies. It would also require integrated front and back-endinformation systems. Customers would expect inventory to be transparent between the web and thestores, and that specials and “exclusives” would be consistent across all channels. Whatever attributesthey associated with a retailer’s brand—whether price, quality, convenience, expertise, service—wouldneed to be translated to the online experience and enhanced.To compete successfully against new online retailers, traditional retailers would also need to find ways totransform the expensive liabilities of physical locations with limited hours and high labor and inventorycosts into assets that complemented rather than competed with the online experience.
  • 8. Best Buy’s Wounds are Mostly Self-InflictedMany retailers have struggled to make the transition; some have fallen on their swords along the way. Sofar, Best Buy fails on every measure. The company has its own website, of course, and offers customersthe opportunity to order online and pickup and return in-store. (At the Pinole store, there is a separateline for pickups at the customer service desk, though it is staffed by the same people who handle returnsand other service problems. Lines are longer and slower than for in-store checkout.)But the website doesn’t seem to be programmed for even basic inventory management. An article in theMinneapolis Star Tribune, the company’s hometown newspaper, reported a few days before Christmasthat the company had only just informed some customers that online orders, some placed the day afterThanksgiving, couldn’t be filled and were being cancelled. The out of stock items included the mostpopular items, including TVs and iPads, “as well as other tablets, cameras, laptops, PS3 games and theNintendo Wii.”The company issued a statement that read: “Due to overwhelming demand of hot product offerings onBestBuy.com during the November and December time period, we have encountered a situation that hasaffected redemption of some of our customers’ online orders.”Let’s parse that sentence for a moment. The company “encountered a situation”—that is, it was apassive victim of an external problem it couldn’t control, in this case, customers daring to order products itacknowledges were “hot” buys. This happened, inconveniently for Best Buy, during “the November andDecember period,” that is, the only months that matter to a retailer. For obvious reasons, the statementties itself in knots trying to avoid mentioning that the “situation” occurred during the holidays.The situation that Best Buy “encountered” has “affected redemption” of some orders. Best Buy doesn’t fillonline orders, it seems. Rather, customers “redeem” them. So it’s the customers, not Best Buy, whohave the problem. And those customers haven’t been left hanging; they’ve only been “affected” in effortsto “redeem” their orders. It’s not as if the company did anything wrong, or, indeed, anything at all.It’s all so passive. It’s also a transparent and truly feeble pack of lies. Here’s what the honest andappropriate release would have said: “Due to poor inventory management and sales forecasting of themost popular products during our key sales season, we can’t fill orders we promised to fill weeks ago intime for Christmas.”There’s a little more to the Best Buy’s press release: “We are very sorry for the inconvenience this hascaused, and we have notified the affected customers.”Again, note the use of the passive voice—”this” refers to the “situation” that Best Buy “encountered.” The“situation,” not Best Buy’s poor operations, “has caused” inconvenience to customers. It’s not somethingBest Buy did wrong. It’s like they’re reporting the weather; something utterly out of their control aboutwhich the company is a mere observer. They’ve “notified the affected customers” despite, it seems, nosense of obligation to do so, let alone to find a solution to a problem entirely of the company’s owncreation. How sorry are they, do you think?Again, here’s my rewrite: “Three days before Christmas, too late for the customers to make alternativearrangements, we are just now letting our would-be customers know. We have no excuse for suchamateur behavior.”According to the article, the company refused to answer any questions beyond the release. Here are afew: How many customers were affected? What specific products were involved? How has the companyfailed so badly to perform to even the lowest standards imaginable for a retailer at Christmas? Did thecompany expect anyone would be fooled by the ridiculously obtuse statement of non-apology?
  • 9. It’s Not Amazon that’s Killing Best Buy—But Best Buy Could Certainly Learn How it’s Done RightIt’s not competition from Amazon that’s killing Best Buy here; Best Buy is doing most of the damage toitself. But let’s compare the two to see how retailing–online or otherwise–is done correctly.First, it’s hard to imagine anything so pathetic happening at Amazon, and even harder to imagine thecompany failing to own up to its errors. Amazon does not take orders it cannot fill, and it does not waituntil the last minute to cancel them without offering any kind of solution.Amazon lives and breathes the customer’s point-of-view. It completely engineers its business practices,its systems, and its people to support it. When they make a mistake, they admit it and they fix it.Immediately. Once, when I had a problem with a new TV that turned out to be a manufacturing flaw, thecompany begged me to let them pick up the unit, send something else, and install it for me. That wasmore solution than I needed, let alone asked for.It’s not just Amazon’s prices that are better, in other words. Its customer service is superior in every way.And unlike traditional retailers, it recognizes its own potential disadvantages and innovates ways toovercome them. The company has no retail locations to pick up merchandise, but it ships instantly, oftenfor free. It has no on-site sales experts to answer questions, but the pages of its products are filled withvideos, FAQs, and customer reviews and answers.The company keeps track of all previous orders, and uses its database to make helpful recommendationsof other purchases. Phone support is instant, responsive, and knowledgeable. Returns are simple andunburdened by restocking fees and other gotchas. Inventory is precisely managed in a single system thatspans all distribution points and third party partners.Best Buy could have done all of this years ago, and done it better. It had decades of experience in retail,in customer service, in distribution, in forecasting, in marketing and sales. It had, one presumes,computer systems that could have been upgraded to integrate with a new online front end. It hadexpertise in the electronic products it sells, and potent leverage over key manufacturers to ensurefavorable terms and access.(Years ago, the CEO of a leading appliance manufacturer told me he felt obliged to keep a low profile onthe Web or face the wrath of his main retail partner. Not many years later, the partner, Circuit City, wasout of business. Oops.)But Best Buy squandered all of those assets. And now, along with many of its big box peers, thecompany is caught in a death spiral. Not because of new competitors who, fairly or unfairly, are eating itslunch. These wounds are self-inflicted.What is management so busy with that it can’t fill orders for the most popular products during the mostimportant weeks of the year? Since 2009, CEO Brian Dunn has been busy pursuing a strategy ofprotecting market share over profit. In the quarter ending November 30, 2011, store sales increased 1%,the first increase in two years. Margins, however, sank–net income dropped by 29%.The annual report is largely silent on initiatives; the company’s website says only that “To meet the uniqueproduct and service needs of our customers, our stores and operating models are being transformed toshift our focus from product-centric to customer-centric.” If only.The company doesn’t report, of course, on customer satisfaction. But there’s a postscript to my personalstory. In part because he was distracted by the “expert” sales staff prying into his personal financesinstead of actually providing assistance, my friend mistakenly purchased the wrong DVD of a NASAdocumentary—he accidentally got one he already had. We returned the next day to exchange it for the
  • 10. correct one. Sorry, said the customer service staff, DVDs are “software” and can’t be returned orexchanged once sold. No exceptions.True enough, the return “policy”—several hundred words printed on the back of the sales receipt—saysthat software cannot be returned. Why not? It’s our policy.But I already have this one, my friend said. “We can’t help you.”Not to beat a nearly-dead retailer, but does Best Buy know that Amazon not only allows easy return orexchange for DVDs without restrictions, the company will even buy back ones you’re finished with? Andeven if the customer is outside the return window or is otherwise technically not entitled to do what she’sasking to do, the company bends over backwards to bend its policies in the interest of happy customersand the on-going customer relationship.Whistling in the DarkI’m not shilling for Amazon or any other successful online retailer here. My point is much more basic.Amazon neither invented nor appropriated its basic strategies from Best Buy or anyone else. It simplydoes what consumers want. Best Buy does what would be most convenient for the company forconsumers to want but don’t, then crosses its fingers and prays. That’s not a strategy–or not a winningstrategy, in any case, now that retail consumers aren’t stuck with the store closest to home.There’s no magic to retailing “hot” products and doing so at a profit. Efficient inventory and distribution,managing customer relationships for the long term, competitive pricing, pre and post-sales support fortechnically complex items: these are the most basic elements of competitive advantage for a retailer thatactually wants to stay in business, now but in the past as well. Most of what Amazon does right hasnothing to do with technology or the Internet at all.Instead, Best Buy is futilely focused on the mathematics of market share. It’s groping with questionableexpansion in Europe and China, and with services such as its recently-acquired Geek Squad subsidiary.(It also bought Napster in 2008, then sold it to Rhapsody this year for an undisclosed amount.)What else has the company got? Management, at least, still believes it has competitive advantages–advantages that even make it attractive to shareholders. According to the company’s most recent annualreport, We believe our dedicated and knowledgeable people, store and online experience, broad productassortment, distinct store formats and brand marketing strategies differentiate us from our competitors bypositioning our stores and Web sites as the preferred destination for new technology and entertainmentproducts in a fun and informative shopping environment.”There’s just one problem. Not one word of that, at least in my experience, is true. Their “people” are notknowledgeable; they are annoying. The store “format” is entirely generic; perhaps a little confusing. Thestores and Websites are not “preferred destinations”—they are destinations, at best, of inertia, or in thecase of exclusives, destinations of the only resort. The “shopping environment” is the opposite of fun andinformative. It’s depressing and humiliating, as in “I can’t believe I had to go to Best Buy to get this.”What you’re hearing is the sound of a once-leading retailer whistling in the dark. The only question iswhether Best Buy management and investors actually know that, or whether it’s obvious only toconsumers. My guess is that they don’t “believe” a word of this, but don’t want to admit it to themselves.(It’s clear from the Christmas debacle that they wouldn’t feel obliged to admit it to anyone else.)Best Buy is living in the corporate equivalent of what psychologists call a state of denial. In business,that’s usually the first step in a failure that ends with a spectacular collapse.Gradually, then suddenly.