This week, Best Buy founder Richard Schulze made an $8.8 billion offer for his former company, saying he could deliver a dramatic overhaul that would stop the retailer's years-long slide. Facing increased competition from Amazon, eBay, and other internet retailers, Best Buy's share price has dwindled from a high of $58 in 2006 to its current level of about $20. Best Buy has even suffered the ignominy of becoming a "showroom" for its online competitors — with customers checking out products in its warehouse-like stores, only to buy them at a cheaper price from Amazon on their smartphones. It remains unclear if Schulze, who stepped down as Best Buy's chairman this May, can even finance the deal — under which he would take the company private with $1 billion of his own money and investments from unspecified private equity firms — but Best Buy's share price soared by nearly 20 percent on the hopes that Schulze could pull off a turnaround. Can Schulze save Best Buy?
Yes. But it will be an uphill battle: Best Buy's only hope for survival is a "massive physical restructuring," says Farhad Manjoo at Slate. Best Buy needs to ditch its model of being a supermarket for electronic goods, since it will never be able to compete with the almost infinite selection of its online competitors. The "runaway success of Apple's retail stores proves that a small, curated product line doesn't necessarily hurt sales," and Best Buy would be better off transforming itself into a boutique featuring top-of-the-line products at the best prices. "It's not guaranteed to work," but if Best Buy "sticks to its current course, it's certain to die."
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