One of our flagship Minnesota businesses, Best Buy, was recently sliced and diced in expert fashion by a columnist for Forbes magazine.
As shoppers shifted online, author Larry Downes writes, brick-and-mortar retailers faced a severe culture shock: “Moving online required new thinking, new management structures, and new strategies.”
Best Buy, in his view, failed to adapt. And it’s paying a heavy price, losing 40 percent of its market value in the past year.
“[Best Buy] had decades of experience in retail, in customer service, in distribution, in forecasting, in marketing and sales,” Downes says. “It had expertise in the electronic products it sells, and potent leverage over key manufacturers to ensure favorable terms and access. But Best Buy squandered all of those assets.”
As I read the article, I couldn’t help but draw parallels to another institution that may have seen its best days: the newspaper business.
During the 1990s, as the Internet shifted from a dial-up curiosity to a basic household utility, newspapers were slow to recognize the threat to their business.
Newspapers had decades of experience in gathering and sharing information. They knew their communities like no one else. They had a virtual lock on local advertising, and they had hundreds of talented, hard-working employees in news, sales and distribution.
But none of the smart people running America’s newspaper companies grasped that the Internet would require completely new products and new ways of thinking. For far too long, newspapers continued to focus virtually all their top-level attention on their lucrative print products.
Newspaper websites, by and large, were run by skeleton staffs who merely shoveled the contents of the print paper into a template. On the ad side, web ads were given away as a throw-in with print buys.
There was little effort made to develop storytelling vehicles that tapped the potential of the digital space, or to create innovative ad services using the immense power of the Internet to interact one-on-one with customers.
I don’t blame the newspaper managers for failing to see the train that was bearing down on them. Because the fact is, we all missed it. In hindsight, I have a hard time identifying even a single prophet whose warnings to the industry were ignored. After the train hit us, we woke up. But until then, we were too busy getting out the paper every day.
It’s too early to write the obituary for either Best Buy or the newspaper business. Although wounded, both have strengths that will make it tough to drive the stake through their hearts.
But just the possibility that an obit could be in the works for either would have been unthinkable 10 years ago.