Please Note:  Since the posting of our original commentary, The Wall Street Journal  and other business media have clarified previous reporting of the abrupt resignation of Best Buy CEO Brain Dunn.  Best Buy has since released an additional statement: ‘Certain issues were brought to the board’s attention regarding Mr. Dunn’s personal conduct, unrelated to the company’s operations or financial controls, and an audit committee investigation was initiated.  Prior to the completion of the investigation, Mr. Dunn chose to resign.” The WSJ also clarified that Mr. Dunn’s resignation came after days of discussion with the board, when both sides agreed on his departure, and that there was mutual agreement for new leadership to address the challenges of the company.

With this recent clarification, the situation at Best Buy remains unclear pending the recruitment of a permanent CEO.

Original commentary follows:

In our Supply Chain Matters 2012 Predictions for Global Supply Chains, available for free download from our Research Center, Prediction Four predicted that three industry sectors would undergo significant challenges in 2012.  One of those three industries was the B2C sector, specifically the continuing momentum of online multi-channel commerce and the subsequent impacts on today’s major retailers. While Amazon has become a goliath of online commerce and fulfillment capabilities, retailers are scrambling to avoid being just a showcase of products while consumers actually buy from a lower-cost online provider.

A major retailer impacted by these trends has been Best Buy, and breaking news today is that Brain Dunn has abruptly resigned as CEO of this major electronics retailer. The Wall Street Journal is reporting that this resignation, although not expected, “reflects no disagreements between the board and Mr. Dunn…. On any matter relating to operations, financial controls, policies or procedures”.   That statement alone can lead to lots of speculation and questions as to why now?

Current board member G. Mike Mikan has been named as interim CEO until a replacement can be found. His background includes former executive roles at United Health Group and Optum, both health services companies.

The retailer recently announced a $1.7 billion quarterly loss for the March ending quarter, along with plans to move away from large footprint stores in favor of smaller footprint specialty stores. That announcement included the closing of 50 stores this year. Best Buy’s traditional bread and butter sales of PC’s, laptops and TV’s have been on the decline as online outlets provided lower-cost options for consumers.

What comes next is a matter of all sorts of speculation. Will Best Buy accelerate its downsizing of brick and mortar presence in favor of a more concentrated specialty online presence?  Are the days of the mega electronics retailer seen their last light?  We will all have to wait and see.

One thing is certain however. The new bricks and clicks model of retail has arrived and our prediction of the continued turmoil and fallout in the B2C sector unfortunately continues.

Bob Ferrari