Best Buy is the latest big box feeling the heat

First it was Sears. Then even mighty Walmart felt the sting of losing sales. Now it’s Best Buy’s turn. Some might call it a tired topic, but it’s a very real fear for major retailers. What can they do about drastically falling consumer demand?

It seems a lifetime ago that upstart Best Buy stood toe to toe with Circuit City, trading punches until the red brand closed its doors. Soon, Best Buy was opening 50 stores a year, popping up on street corners and in malls like mushrooms after a hard rain. These days status quo for Best Buy is sluggish sales and declining revenue. If things don’t change fast, Q1 of 2016 will be yet another lousy quarter.

So is it simply market changes, or is there another culprit at fault. Currently, Best Buy is blaming the lack of producer innovation. CEO Hubert Joly said his company depends a great deal on new products from manufacturers – from better TVs and audio equipment to new phones, cameras, and other consumer electronics. Lately, the chain has been getting too much of the same, and that has Joly feeling particularly grumpy.

Now the company is being forced to “cut costs” in order to keep pace with projections and, at least, slow the slide. Its primary goal remains to return profits to shareholders, which creates a precarious PR position. Consumers don’t care if shareholders get their due. They don’t want to see Best Buy closing stores and laying off workers for any reason. Doesn’t matter that they are shopping online or elsewhere and that this lack of business is forcing the company to remember where their cash really comes from.

In the world of consumer public relations, companies tend to suffer for keeping their promises to shareholders. Even if consumers understand on an intellectual level, they don’t want to hear bad news about business … even if their apathy is a factor in that bad news. It’s a touchy tightrope to walk, but Best Buy must cross it if the company will be in any position to fight back a restructuring Walmart and the surprise re-emergence of Circuit City, which is promising a long overdue comeback and teasing a new, sleeker retail model.

Ronn Torossian is the founder and CEO of 5W Public Relations. 5WPR is headquartered in New York City – with offices in Los Angeles and Denver.

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