In the past year, Best Buy has seen falling profits, layoffs and competition from retailers such as Amazon and Wal-Mart as it works its way through the recession.
Brian Dunn was a pouffy-haired, unemployed 24-year-old when his mother, Ethel, suggested he get a job and get one quick. Ethel was working in the accounting department at Best Buy and urged him to apply for a job there.
That was 1985, and Brian Dunn ended up landing a sales job in one of the retailer's 12 stores. On Wednesday, Ethel crowded into a packed auditorium with shareholders, company executives and employees as her son officially took over as CEO of Best Buy, which now is a $40 billion company and the largest consumer electronics retailer in the nation.
Upbeat and down-to-earth, Dunn takes the top spot as Best Buy, along with most of the nation's retailers, is seeing profits fall as consumers cut back on discretionary spending.
In the past year, the Richfield-based company has laid off more than 500 employees, reorganized its staff at headquarters and at stores, and seen vigorous competition from Amazon, Wal-Mart, Costco and Target. But the same time, Best Buy has put away Circuit City, its largest competitor, and now operates in an arena where smaller specialty retailers have less and less sway with vendors and consumers.
Hours after officially taking over, and as an internal video crew documented every move of his first day, Dunn downplayed the challenges at hand.
"Our industry has had cycles of feast and drought, feast and drought, feast and drought," he told reporters following the retailer's annual shareholders' meeting.
Dunn, 49, is well aware that he's been known as a "retail rah-rah guy," as he said at the meeting. But he's sure-footed about leading the company into its next phase: what he calls the "era of ubiquitous connectivity."
Consumers expect to be connected to their businesses, to music, to photos, to friends and family, in their cars and across the Atlantic, Dunn said. And Best Buy's goal, he said, is to make it happen through better customer service, prices and selection on consumers' top electronic needs, such as mobile phones, computers and home theater systems.
He plans to redesign stores to tie together the "connectivity" elements and to continue beefing up Best Buy Mobile operations both within stores and as freestanding mall outlets. Dunn predicted the retailers' share of the mobile market would jump from 3 to 15 percent "relatively quickly."
Love Goel, of GVG Capital Group in Minnetonka, joins many industry experts in predicting a smooth transition.
Best Buy is unique in that it has become the "de facto standard for consumer electronics," Goel said. Home Depot has competition from Lowe's and Menard's, he noted. Office Depot has Staples.
But within a few years, the battle for Circuit City's customers will be over. Then what?
"Either they've got to get into new categories to sell to customers they've already got, or they've got to go and sell more of the same stuff to other people who are buying from Costco and Wal-Mart," said Goel, whose firm focuses on the retail and consumer sectors. "There's only two ways to grow, and they're gong to have to figure that out."
A standing ovation and hugs
Dunn is Best Buy's third CEO since 1966 and takes over for the retiring Brad Anderson. Anderson, who also worked his way up from the sales floor to the corner office, led the retailer for seven years. He was the chief architect of its "customer centricity" strategy, which moved the company from a focus on selling products toward one aimed at giving customers what they wanted.
Under Anderson, the number of stores grew more than six-fold, with Best Buy now operating 3,900 stores in 13 countries, and he delivered stockholders a 50 percent return on his watch.
"I set out to be a transformational CEO, and now that I'm leaving, I'm feeling like a transitional CEO," said Anderson, who received a standing ovation from the crowd, and hugs from Best Buy founder Richard Schulze and Dunn.
During his remarks to shareholders and employees, Anderson choked up -- not when reflecting on his own 36-year career -- but when he talked about Ethel, and the "ferocious sense of personal values" she brought to the company and to her son.
"I don't think I ever saw Ethel lose an argument," he said, crediting her with bringing ethics to the accounting department.
'Not a tale of woe'
Dunn moved to Minnesota when he was about 15, and said his father "split shortly after that." Dunn took a job at a grocery store to help support the family. Instead of going to college, he went to work.
"It's not a tale of woe," he said in an interview last year. "I met wonderful people that mentored me. I've had wonderful experiences and it's very much shaped the leader I am today. I'm actually grateful for it."
Dunn said the "tough times shared together" forged relationships with his mother and siblings that are "deep and special." He speaks often of how his three boys use technology to stay connected and keep him grounded about how kids use the gadgets that fill Best Buy's shelves.
His brother and sister, wife and kids joined 250 others at corporate headquarters for the official changing of the guard.
Randy Zanatta, who co-founded Golf Galaxy, spent 17 years at Best Buy and was hired by Anderson. He said the company "has made all the right moves to separate themselves from the mass discount stores," and that a leader with Dunn's "ability to motivate and inspire" is the right man at the right time.
"As Best Buy was evolving, I saw a lots of new people coming in, some of them with much better pedigrees than Brian," said Zanatta, who now runs a retail consulting firm, Retail Minds. "I'm thrilled that one of the real, old-time Best Buy guys made it to the top and it wasn't some super MBA genius from someplace else."
Anderson went to seminary, and often made references to how that shaped his leadership.
Dunn described him as a John the Baptist figure, as he evangelized about turning the company from a product-focused business into one built around customers' needs.
Dunn said the magnitude of his new responsibilities hit him Tuesday night, as he was leaving his first dinner with the board of directors.
Jackie Crosby • 612-673-7335