Brad Anderson has not been afraid to take risks in the hope of developing Best Buy into a more profitable company. With his motto of looking further ahead than just the next couple years, Anderson surpassed Circuit City in 1996, making Best Buy the top consumer electronics retailer. Although he has used methods some would be too timid to employ, Best Buy has held that position up to the present day, and still continues to innovate.When Anderson was still an up and coming employee, he began to work under the guidance of then CEO, Dick Shulze. It was in the 1980s, when the company began to expand both their number of store and their profits, that the two had the idea of ending its current practice of offering its salespeople commission and instead pay them salaries. This move was controversial both with the employees and the makers of some of the products.
Companies such as Hitachi and Toshiba were not impressed with the innovation as they depended on commissioned sales people to push high prices for their products to consumers. Rising above these concerns, Anderson saw the positive change in his customers who were no longer burdened by pushy salespeople. This both increased customer satisfaction and put Best Buy on a path of expansion which lasted 12 years.This boom lasted until the early 2000s, when the peer-to-peer music revolution took place. As a consequence of consumers’ new-found freedom of not having to purchase music, Best Buy took a hit.
Besides this economic downturn, Best Buy’s competitors, Wal-Mart and Circuit City, where challenging the companies number one position. Anderson, who saw an opportunity to stave off the competitors, purchased Geek Squad. Anderson’s concern for the customers satisfaction led him to the decision. Knowing that his competitors would never give customers the assistance they needed and the fact that new consumer technologies were becoming more and more complicated helped Anderson turn Geek Squad, a formerly $3 million a year company, into a $20 billion a year enterprise practically overnight. By 2005 Geek Squad had become a part of every Best Buy in the nation.By this time, Best Buy had saturated the North American market. But this lead to a conflict between the company and Wall Street; Wall Street had come to expect a 20 percent growth rate per year.
Anderson, in his search to a solution for this conflict, came across Professor Larry Selden, a business theorist. Selden told Anderson of his theory about where most businesses go wrong; they do not recognize there are profitable customers and non-profitable customers. Selden’s model, which came to be known as “centricity,” argued that a company should find out who are going to be the most profitable customers in a given area, and then arrange your store around their needs, hoping that these customers will purchase more products and come back more often.Although it is a major cost to “centrize” a store, Anderson has no doubt that it will pay off in the long run. Judging from his past record of turning Best Buy into what it is today, there is little doubt in my mind that he is right. Although there are critics to Anderson’s plan, it has been his unorthodox ideas and his courage to take leaps of faith that make Best Buy different. But in the end, his belief in the value of the individual customer will be noticed by consumers, and for this they will be grateful and loyal customers.
Works CitedAnderson, Brad . “Best Buy – Community Relations.” Besy Buy. Best Buy. 16 Apr. 2006 <www.bestbuy.com>.
“Best Buy.” Wikipedia. Wikipedia. 16 Apr.
org/wiki/Best_Buy>.Boyle, Matthew. “Best Buy’s Giant Gamble.” Fortune Magazine 3 Apr 2006.