In the face of changing consumer habits and shifts in mobile technology, two business giants — Best Buy and Research in Motion — have announced changes in their business strategies.
After a weak earnings report, Best Buy says it’s going to close 50 stores and cut 400 jobs. The news comes just a couple of months after a Forbes article ran with a headline “Why Best Buy is Going Out of Business… Gradually.” The article pointed to poor and annoying customer service along with some product flops (like 3D TV) and retail’s move online as reasons for Best Buy’s slow demise.
More recently, CNET called Best Buy a showroom for Amazon. Ouch.
Best Buy is coming around on the customer service idea, with CEO Brian Dunn saying the company will invest in that area, promising more employee training and a better customer rewards program.
He also said this: “Over the last three years, the industry experienced little innovation and many of the large traditional consumer electronics categories such as television, PCs and gaming. At the same time, consumers have enjoyed greater price transparency and ease of costs shopping.”
The company will instead focus on smaller mobile stores, in lieu of huge “big-box stores,” switching up its retail structure. But even there, Best Buy could run into trouble. Apple stores have pulled away mobile customers (among others). And the mobile industry is undergoing a shift as well.
RIM announced a quarterly loss yesterday and said it was going to target corporate customers going forward leaving Android and Apple to fight over individual customers.
“We believe that BlackBerry cannot succeed if we tried to be everybody’s darling and all things to all people. Therefore, we plan to build on our strength,” said the company’s new CEO, Thorsten Heins. Former co-CEO Jim Balsillie is leaving the board and CTO David Yacht and global operations COO Jim Rowan have stepped down.
But even among business customers, BlackBerry has been losing ground to competitors.
BusinessWeek calls BlackBerry’s “survival plan” a “risky” one because it’s dependent on a segment of the market that is the slower-growing one with more employers allowing staffers to use personal devices for business purposes.
In other words, corporate customers are now also the individual customers that the company says it’s cutting loose. A Forrester Research analyst, Ted Schadler, told BusinessWeek that “RIM needs to do a better job of reminding organizations that it can offer customers a dedicated network and secure servers.”
But more than that, we need to go back to the quote from Best Buy’s Dunn, who lamented a lack of innovation in certain electronics areas. Both of these companies need to come up with something fresh. The changes that they’re offering aren’t really different at all, just small shifts on what was already in place. The number of stores Best Buy is closing is actually quite small, and it has been focusing on mobile for some time. Now it just plans to do so in a larger degree.
And BlackBerry is merely going back to its roots rather than offering up something different, like a better tablet, to reach new and existing customers.
Neither company has said anything that signals something new and exciting is in the works. Only that the way they’ve been doing things is going to change. But the way they’ve been doing things doesn’t seem to be working either.
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