There has been a lot of criticism ofBest Buyin the wake of the unexpected resignation of CEO Brian Dunn, but at least one industry analyst thinks that much of the criticism has been ill-informed and “fact lite.”
In a blog post on the NPD website, peppered with market share statistics, Vice President of Industry Analysis Stephen Baker lays out the case that Best Buy remains the dominant retailer in its category and is “in the best position” to succeed in the coming years.
Best Buy has been doing “pretty well in coping with, and managing, the changes to its business, preserving its legacy strengths while moving as rapidly as possible toward a future of which no one has an exceptionally clear vision,” he said.
Baker bases his argument on the market data his firm collects. For example, he explains Best Buy’s share of consumer technology revenue in 2011 stood at 19 percent of hardware sales. That’s exactly what it was in 2010 and what made it the leader in sales by a substantial margin.
He also noted that Best Buy was the No. 1 brick-and-mortar retailer online and that it gained almost one point in revenue share, now 22.4 percent among retailers on the Internet.
In other key product categories, Best Buy continues to lead as well, he said. For example, Best Buy’s market share is 10 points higher than any other outlet that sells Windows notebooks and generates two-times the revenue from those sales than any other retailer.
In declining categories Best Buy is gaining market share, including point-and-shoot cameras, DSLR cameras, and MP3 players, Baker said.
“Today’s problems in consumer technology are structural, they hit all retailers, all suppliers, and all brands equally,” he wrote. “The change in product demand, and the shift in the customers’ view of the value and the necessity of their devices have caused a sea change in the market. Retailers, as the ones most connected to the consumer, feel these changes first — and when you are the biggest and the most successful retailer, you feel the change ahead of the other retailers. There is no doubt that Best Buy is in that position.”
Best Buy has lost about a third of its value since its high of $32.85 in June. Dunn’s departure in the midst of a probe into allegations of personal misconduct focused a spotlight on the company and its practices, just one factor that lead to the decline. The Minneapolis Star Tribune and other media outlets have reported that the Dunn investigation centers on the alleged misuse of company assets involving an inappropriate relationship with a female employee. The company has declined to disclose the details of the investigation.
That story also has reignited allegations first raised by research company Management CV two years ago about favoritism granted to Best Buy founder Richard Schulze’s relatives. Schulze remains Best Buy’s chairman and the company’s largest shareholder, with a 20 percent stake.
Beyond these issues, however, Best Buy continues to face the challenges of its marketplace, and on that point, Baker offers no debate.