Electronics challenges await

Delivering on the brand promise of “expect more, pay less,” has become particularly challenging for Target in the electronics and entertainment space. Between Walmart’s aggressive price cutting and improved offering of brands, and Best Buy’s emphasis on service, selection and price, Target is in a tough spot.

Now, cross-town rival Best Buy is talking about continuing to upgrade its emphasis on service under the leadership of president and COO Brian Dunn who will replace Brad Anderson as the company’s CEO. Dunn joined Best Buy as a store associate in 1985 when the company operated only a dozen stores, and he held positions of increasing responsibility before he was named EVP U.S. retail in 2002. Dunn was named president of retail, North America in 2004 and was named to his current role as president and COO in 2006, where he was responsible for the company’s more than 1,000 U.S. stores, Geek Squad, marketing, customer experience and merchant functions.

The move is significant because Dunn is the executive who was instrumental in propelling Best Buy to industry dominance with a strategy based on the premise of helping people unlock the potential of technology. Neither Target nor Walmart has demonstrated an ability to deliver the type of knowledgeable customer service Best Buy consistently provides. That point of difference is expected only to grow in importance as electronics grow more sophisticated and complicated, which suggests that Best Buy is well positioned relative to mass-market competitors.

And with Walmart unlikely to relinquish its lock on the low-price proposition, Target has some strategic decisions to make about its future role in the electronics and entertainment business.