The likes of traditionally brick-and-mortar-centric Best Buy and Wal-Mart have made great strides to compete more effectively online, but they need to continue to evolve in order to close the gap with e-commerce powerhouse Amazon, said former Best Buy CEO Brad Anderson.
Appearing on CNBC's "Squawk on the Street" on Cyber Monday, he said Amazon is an "incredible company," built for innovation in the digital age. "In its core culture, [Amazon is] constantly making changes, adapting, making mistakes, using the bottom of the organization as well as the top of the organization."
"Companies like Best Buy and Wal-Mart … are going to have to adapt their cultures to be able to move as fast as Amazon," Anderson said.
He said the slow response by most brick-and-mortar retailers to the rise of Amazon was due to complacency. "I think that occurred in a sense because the warnings of what online would do took about five years."
But physical stores have some inherent advantages, such as having inventory available locally to fill online orders, said Anderson, who was CEO of the electronics retailer from 2002 to 2009. He retired from the board this past summer.
For example, Amazon added 26 fulfillment centers in 2016, nearly double the number it opened last year, as the e-commerce leader looks to establish physical locations to turn orders more quickly. Amazon has a total of 149 fulfillment centers nationwide.
By comparison, Best Buy has 1,400 stores in the U.S. that it could better leverage.
"Over the longer term, they've got to develop value propositions that pure online cannot deliver," Anderson said.