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[10 comments]

Best Buy Taps Starbucks' Star as CIO

March 12, 2012

A CIO hiring rarely makes headline retail news. But Best Buy did just that in naming Stephen Gillett, who oversaw Starbucks' recent digital conquests, to head Bestbuy.com and the electronic retailer's other digital efforts.

"E-commerce is one of the fastest-growing sales channels for our business," Best Buy CEO Brian Dunn said in a statement. "We want to build on that momentum and Stephen's track record makes it clear that he can help us engage customers online in even more compelling ways."

Named in 2011 as one of only two CIOs on Fortune's "Executive Dream Team" among 25 executives recognized, Mr. Gillett's resume includes stints at Yahoo, CNet Networks, Sun Microsystems and Corbis, a digital media company owned by Bill Gates. A former offensive guard for the University of Oregon football team, his reputation has been further padded by his video gaming prowess. He ranks among the top guild masters in the popular World of Warcraft online game.

But Best Buy hired him for his feats helping Starbucks re-engage customers through digital channels.

Joining Starbucks in 2008 as part of the reorganization led by returning Starbucks founder Howard Schultz, Mr. Gillett, 36, oversaw the rollout of free Wi-Fi access across Starbucks locations and introduced the Starbucks Digital Network whereby customers received free publications, including The Wall Street Journal and free music downloads from iTunes inside locations.

Under his watch, a mobile payments program was launched last year with a close tie-in to Starbucks loyalty cards and a stream of mobile apps have debuted that were regularly cited as at the forefront of the industry. Its iPhone app launched last summer provided the ability to send Starbucks gift cards via a mobile device.

Mr. Gillett said that by blending channels in a "harmonious way," Best Buy will raise the game for retailing.

In response, Starbucks promoted Adam Brotman to chief digital officer and Curt Garner to chief information officer to fill Mr. Gillett's roles in what was positioned as a deepening digital commitment. In a statement, Mr. Schultz pointed to the "rapid adoption" of social and digital media as a primary means of connection and communication, adding, "we have recognized this shift and have made it a priority to establish a position on the leading edge of innovation and are now taking this a step further."

FINANCIALS:     [NYSE:BBY]

Discussion Questions:

Discussion Questions: What lessons from Starbucks do you think Stephen Gillett will bring with him to Best Buy? Will Mr. Gillett's experience help give Best Buy an effective response to overcome "showrooming" in its stores?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How much more or less optimistic are you about Best Buy's turnaround efforts on the news that Stephen Gillett will be joining the consumer electronics retailer?

Comments:

Stephen Gillett has done a remarkable job "showrooming" Starbucks, and there is no reason to doubt that he can't transfer his skills and direction to do the same for Best Buy. Skills are interchangeable in these types of fields and all too often, companies rely too heavily on hiring people that worked at similar companies marketing similar items, rather than to hire the real skills and resources of an executive.

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

This is a move that's long overdue. BBY's digital disconnect between the store and the Web has been holding it back for years. It needs to avoid a focus on bright shiny objects and instead look at how to connect its online presence and its stores. When a customer who purchased an item online and now wants to cancel that sale at a store has to BORROW THE TELEPHONE to call Richfield MN, something is deeply wrong.

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Cathy Hotka, Principal, Cathy Hotka & Associates

Stephen Gillett will probably bring numerous formulas for those coffee breaks in Best Buy's Minnesota headquarters and the knowledge of how to blend channels in a harmonious manner. Thereby improving both the coffee breaks and, hopefully, overcome "Showrooming" in BB's stores. That's a double plus.

But Mr. Gillett has shifted around more in business than he did as an Oregon offensive guard and so he needs to accomplish his goals rather quickly before he is beckoned by another company seeking to improve.

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Gene Hoffman, President/CEO, Corporate Strategies International

It's a great hire, and more retailers need to look for the CIO that understands how to blend the physical store and online channels into a blended approach. It's not about the technology, but rather what the technology can do to enable the customer's experience.

I also love the reference to Mr. Gillett's standing in World of Warcraft. Maybe I can leverage my Angry Birds ability.

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Doug Fleener, President and Managing Partner, Dynamic Experiences Group

There's a significant difference between Starbucks and Best Buy, and this is where I see big challenges. At Starbucks there was very little need to keep much in synch across channels besides store locations.

Best Buy's problem is less about "showrooming" or lack of a digital presence and more about inconsistency across channels and really unfortunate customer service. Mr. Gillett will have to leverage both his own experience and the experience and knowledge of his peers to help Best Buy START its turnaround.

Then, if Best Buy also puts knowledgeable sales associates back in the stores, we will start to see a turnaround. Follow that with better organizational integration between channels, and we've got a story.

Not all business problems can be solved with technology. The most positive sign I see here is a recognition that no one wins in a race to the bottom, price-wise.

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Paula Rosenblum, Managing Partner, RSR Research

I expect Stephen to bring a lot to Best Buy. Two things I really like about his fit there:

1. He thinks about digital as a way to improve the shopping experience across all touch-points, not as a standalone channel to generate extra revenue. At Starbucks, Steve's contributions to the in-store experience (Wi-Fi in stores, in-store entertainment network, mobile payments), were much more important than the e-commerce (starbucksstore.com). That will serve him well at Best Buy, where the mission will be to leverage the stores as a competitive advantage.

2. He's a digital guy. Steve isn't an IT or retail guy that learned digital. He grew up digital, and that's how he thinks, which is exactly how his customers think.

Of course he's going to have challenges. E-commerce is a much bigger part of the revenue mix at Best Buy than it was at Starbucks. Best Buy and Starbucks are two organizations with their own institutional quirks that can be difficult to navigate. A good friend of mine likes to say, "They aren't a battleship, they are 1000's of row boats all trying to head in the same direction."

At the end of the day, Stephen is going to have to find a way to live with the Caribou Coffee in the lobby of his new office, and find common ground with a Chief Marketing Officer that used to head marketing for said coffee rival.

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Jason Goldberg, VP Commerce Strategy, Razorfish

It's interesting how struggling retailers like JCP and now Best Buy position "big" hires like these. Best Buy has enormous upside in terms of improvements it can make but there are other aspects of its business, and its competitive set, that a better digital footprint can only partially improve.

While an improved omni-channel customer experience is a start -- and perhaps the most important one for Best Buy -- there is formidable competition for a better experience (e.g., Amazon) and better value (e.g., Amazon, and a host of others including WMT).

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Phil Rubin, CEO, rDialogue

There are a number of lessons that Mr. Gillette will be able to bring from Starbucks to Best Buy. A number of the unique initiatives that Starbucks launched in the past several years were focused on building community and driving engagement among customers while they were in the Starbucks stores. The network that they created was able to increase time spent in store and engagement, which increased customer frequency and average order value.

The opportunity for Best Buy is to motivate customers to visit their stores more frequently and to stay longer and spend more. While the key learning's from Starbucks are not likely to be replicated exactly, the overall strategy of increasing engagement and demonstrating the benefits of community, specifically the Best Buy community by leveraging digital assets across multiple channels has great potential to help the company reinvent and restore relationships that have been damaged in the recent past.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

The synergies between Starbucks' brick and mortar locations and website became seamless, and this is what would greatly benefit Best Buy.

Best Buy has done a good job in attracting younger demographics with their gaming offerings, the stores have become destinations. However, the website -- albeit it a great retail website -- does not reflect the in-store experience.

If Mr. Gillet is able to integrate the retail and brick and mortar experience it will allow Best Buy to grow a category where the products all have the same price (no discounting even at the club stores) and shopper experience is becoming the differentiating factor.

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Carlos Arámbula, Managing Partner, MarcasUSA LLC

I tend to agree with Paula Rosenblum on this one. Stephen Gillett's expertise will be useful to Best Buy, not as a means of combating "showrooming" in a literal sense, but to figure out how to use technology, mobile apps and loyalty programs to drive customer engagement.

This, after all, is how Gillett made a name for himself at Starbucks. If his goal is to blend Best Buy's channels in a "harmonious way," then the company will need to evolve its strategy to provide a more consistent customer experience across all channels: online, mobile and in-store. In other words, Best Buy must deliver an "omnichannel experience" -- and as Paula noted, its turnaround depends on delivering a better in-store experience first and foremost.

Christopher Krywulak, President and CEO, iQmetrix

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