Can Best Buy follow Wal-Mart's path to $100 billion? - Editorial - Brief Article - Statistical Data Included

DSN Retailing Today, Jan 21, 2002 by Tony Lisanti

It sounded hauntingly familiar and somewhat bold last week when Best Buy chairman Dick Schulze predicted, during its annual analysts gathering at the Consumer Electronics Show 12 days ago, that the retailer would be a $100 billion dollar company in 10 years.

I can remember in June 1990 when Sam Walton uncharacteristically made the same prediction about Wal-Mart.

The major difference is simply that many of the Wal-Mart executives at the time were surprised Walton made such a statement and somewhat intimidated with the task of actually achieving what was perceived as a very ambitious goal for the "small" retailer from Bentonville, Ark., just entering its super growth phase.

It seems the Best Buy executives are certainly more focused on Schulze's goal and the strategies that will get the company there, and less concerned about how the hell they're going to accomplish it.

When Walton made the prediction, Vial-Mart was faced with the challenge of growing the business by $70 billion, which it accomplished three years ahead of schedule in 1997. Best Buy needs to add about $80 billion.

It took Wal-Mart a few years after Walton's prediction to truly develop its global corporate strategy, but Best Buy has it well-developed already at this point.

And just what are those specific strategies that will catapult Best Buy to $100 billion to become, quite possibly, only the second retailer in the world to achieve such a milestone? Consider the following:

* Acquisitions. In order for Best Buy to achieve such phenomenal growth over the next decade, it must come as a result of acquiring other companies that complement its core format.

* Global brand. This company must continue to enhance its reputation and stature, not simply as the largest electronics chain in the United States, but as an international growth company.

* International. With the addition of Canadian electronics retailer Future Shop last August, Best Buy made its first foray across the U.S. border. It will be just the beginning of a decade of global expansion that could possibly take the company to well-developed European retail markets, such as the United Kingdom and Germany.

* Multiformats. With the traditional Best Buy big-box approaching maturation at about 650 stores over the next several years, the company's philosophy is to drive growth with its other formats, including Sam Goody and Magnolia. In addition, Best Buy is considering a smaller version of its core concept, about 20,000 square feet, for smaller markets.

* Synergy. The company believes in "knowledge transfer" among its corporatewide formats, and it's this exchange of ideas that gives it a competitive edge.

* Leadership. A strong and experienced manangement team is in place and new leaders are being developed.

* Entreprenuerial spirit. As it communicates its "fun" message to consumers, the company has created an energetic, positive, fun workplace environment.

* Customer loyalty. With 600 million customers expected to shop its stores this year, Best Buy will continue to explore innovative ways to serve the customer and enhance loyalty.

* Expense control. Best Buy is as focused on growth as it is on managing expenses and creating a more efficient company.

* Value. Best Buy believes price is only part of a value equation that also includes a fun and exciting in-store experience, as well as satisfying service and solutions issues for customers.

* Merchandising savvy. Best Buy is committed to being a leader in digital technology products and, more importantly, in connecting the home.

With a very focused strategy, Wal-Mart delivered on Walton's promise of more than a decade ago and will top $200 billion this year.

And now it's Best Buy's turn to fulfill its founder's dream of becoming a $100 billion company.