Oh how times have changed. Best Buy, the consumer electronics company once renowned as one of the best companies in the early 2000’s, has gone from record growth to huge declines and stagnation. When one of its biggest competitors fell off in 2011, Circuit City, experts following the company have accused the company of lazy tactics, as well as a lack of innovation in order to stay ahead of the times. However, despite all of the talk of doom and gloom for the company, there is still belief that Best Buy can still turn things around as its share price hit $44 last November, a new high for the company. Sure, your neighborhood Best Buy may have closed in the past few years but that does not mean the company won’t see a brighter future.

But first, in order to properly understand how Best Buy can thrive in the future, we must examine how it got to where it is today. It all started in 1966 when founder Richard Schulze and his business partner opened an audio specialty store, with no emphasis on consumer electronics, yet. The first stores were all in Minnesota, where Shulze was from, and in 1970 Sound of Music, the name of the company, had made its first $1 million and had opened 9 other stores within the state (Wall Street Journal, 2013). Fast forward to 1983, and the board of directors of the company had decided to rename and rebrand the company as Best Buy, with the purpose of putting more of an emphasis on consumer electronics. This year was the turning point for the company as it also opened its first “megastore” that we have begun to know over the years. After this, the changes begin to steamroll quickly because is 1985, the company raised $8 million on its initial public offering on the Nasdaq (Wall Street Journal, 2013). Along with its debut on the New York Stock Exchange in 1987, the company sought to transform its stores by having stores that were not cheap and dimly lit. Along with this change in the nature of their stores, the company did away with the practice of paying their salespeople on commission, in an attempt to rid the work environment of questionable sales tactics like we see at car dealerships across the country. Just five years after the company hit the New York Stock Exchange, it made its a first $1 billion in annual revenues (WSJ, 2013.) Fast forward to 1999, and we see the successful partnership with Microsoft that saw the two companies cross-promoting products, and just a year later Best Buy was added to the S&P 500 index.

As 2000 came, the company began to see many changes that began with the succession of Richard Shulze, the company’s founder and long time CEO. He was taken over by Brad Anderson who had been apart of the company for many years. Along with this theme of change and reaching new heights, Best Buy opened its first international store in Canada, along with their acquisition of Geek Squad in 2002 (TWICE, Alan wolf, 2002). Another international acquisition took place occurred in 2006 when they bought the Chinese based appliance retailer Jiansu Five Star Appliance, and the company opened its first stores in China the year after (Businessweek, 2007). Before most of these acquisitions of international companies and their subsequent emergence in the international market, in 2004 Best Buy was named “Company of the Year” by Forbes, a recognition that this was once one of the most well run companies in the United States (Forbes, 2004). In 2009 Best Buy became the first third-party company to sell Apple’s iPhone as well as its purchase of Napster in 2008, as the company was thinking of entering the music selling market, as it had already begun to sell musical instruments (Reuters 2009). But in 2010 is where things stet to get tricky for the consumer electronics giant.

In 2010 Best Buy had opened 11 store in the United Kingdom to further their goal of having an international presence. But in a bizarre move in the following year, Best Buy closed those “U.K. big-box stores and paying $1.3 billion to buy out its partner in U.S. mobile-phone retailing as the electronics giant retools its struggling business to focus on smaller shops” (Bustillo, Wall Street Journal, 2011). At this point in time, the company could be described as having a “recession”, if it were a government, instead it is a mightily struggling company trying to figure out how to turn around “five consecutive quarters of sales declines at stores open at least 14 months, already closed big-box locations in China and Turkey earlier this year as it reins in capital investment” (Bustillo, Wall Street Journal, 2011). But this was just the beginning of the avalanche of bad news that the company had yet to announce. The next year, 2012, Best Buy announced a “$1.7 billion quarterly loss and outlines a plan to move away from the big-box strategy. The company says it will close 50 large stores in 2012 and test remodeled store formats in San Antonio and Minneapolis, while adding hundreds of small stores focused on selling cellphones. It also discloses plans to lay off 400 workers as part of a plan to trim $800 million in costs” (Wall Street Journal, 2013). For whatever it’s worth, as a resident of San Antonio during the years of their “remolded store formats”, I have yet to step foot in the store, and I’m not sure if any of my generation have been frequent visitors either. But we’ll get to this later on.

In his 3 year reign as CEO of the company, Brian Dunn had experienced both some of the best and worst times of the company’s history, but to add to his misery the now ashamed  Dunn quite possibly took the company to a new low. When Dunn first joined the company as a salesperson, he slowly moved his way up the corporate ladder for 28 years until 2012 when he resigned due to the criticism that he was “not moving quickly enough in the face of online competition” and as a result, “Director Mike Mikan is named interim CEO until a replacement is found” (Wall Street Journal, 2013). However, the controversy did not stop there. In internal investigation was released later that year where “an internal probe finds that he [Schulze] didn’t alert other directors that his handpicked successor as chief executive, Mr. Dunn, was allegedly having an inappropriate relationship with a female employee” (Wall Street Journal, 2013). Over the next year Shulze, who was still the company’s biggest shareholder, looked to buy out the remaining shares in the company in an attempt to take the company private, but newly appointed CEO Hubert Joly nixed the deal and the company remains in a struggle to find itself in an ever evolving marketplace for big-box retailers.

But how did it all go wrong for the “ultimate showroom” electronics retailer after many years of sustained success? First of all, many of its products that it sells are easily bought online with the click of a button, which further curtails the company’s pride in their showroom experience and excellent customer service track record. Some experts who have followed the company over the years that, despite its success against its former competitors like Circuit City who have gone by the wayside, the company has struggled to innovate and too sure of its own position in the marketplace. With the emergence and growth of Amazon, who sells essentially the same products as Best Buy and then some, Best Buy hasn’t coped with this evolving and changing scenario. As Al Lewis of the Wall Street Journal aptly states, “the electronics retailer’s critics have been calling this a deadly idea for years: Customers go to its giant stores to play with its toys, then they buy them somewhere else, sometimes using a smartphone before they even leave the floor” (Lewis, WSJ, 2014). Recently, after a dismal holiday period for the company resulted a whopping 28% slump in the stock price after they reported total revenue had slid 2.6% (Lewis, WSJ, 2014). This should not come as a surprise as a company the way Best Buy is structured would see its employees working more hours during  the holiday period, but still not seeing more sales. In essence, a higher operating cost with no benefit in terms of more sales of products.

But just exactly how Best Buy crawls out of the dark hole of irrelevancy that it is currently is a more difficult question to answer. One idea that has been tossed around is the idea of irrelevancy in terms of the number of stores. For example, Best Buy currently “maintains a total of 1,512 in the U.S. and another 489 around the world” (Rosenblum, 2013), which is an astonishing number when you think about the cost of overhead in maintaining these stores along with the employees. But its not just a fewer amount of stores that could help alleviate the company, they also need to invest in their website so that it can compete with the likes of Amazon in regards to its ease of interface navigation. After going to the Amazon website all it takes is a few clicks, sign into your account, and your package will arrive in the next three to five business days. But the investments should not stop there. Along with fewer stores and a better website, Best Buy has to capitalize on its physical advantage that it has on its competitors rather than simply try to be like them, because you are not Amazon. Meaning the company has to multiply its efforts in offering the customer the best experience possible, and that does not just entail great customer service. It means hatching out a store layout, something they have toyed with over the years, to where people know where they can easily find the product they are looking for compounded with a knowledgable employee who can tell them about the shiny new gadget that you absolutely have to have.

Sure, there is a lot of work to be done for Best Buy but that does not mean big-box retailers like them cannot survive in today’s world. The good news is, there is a lot of room for improvement and that it should maintain the stance that the company has already seen the worst of it and better times are to come. All of the listed improvements for the stores certainly are not too much to ask for, and despite the tribulations with the scandal, and cover up with former CEO’s, Best Buy can play an important role in the future as it tries to find a balance between the likes of Wal-Mart and Amazon.

Sources: http://online.wsj.com/news/articles/SB10001424052702303465004579324992775153208, http://www.forbes.com/sites/paularosenblum/2013/08/12/can-best-buy-survive-and-are-its-problems-really-all-about-amazon/, http://www.forbes.com/sites/lauraheller/2011/09/19/where-best-buy-went-bad/, http://online.wsj.com/news/articles/SB10001424052702304299304577350223835262792, http://www.twice.com/news/news/best-buy-wraps-future-shop-deal/22591, http://online.wsj.com/news/articles/SB10001424052970204554204577023320303430402, http://journalistsresource.org/studies/government/municipal/impact-big-box-retailers-employment-wages-crime-health?utm_source=JR-email&utm_medium=email&utm_campaign=JR-email#

Maybe you haven’t noticed a change to the offerings at your family dinner table or the prices at your favorite restaurant, but meat prices have skyrocketed recently mainly due to droughts in recent years in Texas, America’s biggest state for cattle. Experts have cited the most devastating drought Texas ever saw in 2011, the driest year the state has experienced. But 2011 wasn’t the last of the drought, as Texas has experienced several other less severe droughts since as well as the rest of the southwest region. When adjusted for inflation, the price per pound for ground beef has hit $3.55, a 56% increase from just 2010. This drastic weather has dramatic reprecussions that all of America is now facing.

 What this drought means is that feed prices have gone through the roof, which in turn means that cattle ranchers are now forced to raise fewer cows. So, less cows being raised, that surely isn’t enough to see the highest prices for beef in 30 years is it? But there are more problems causing these prices increases, mainly due to emerging countries and economies like China who are now eating more beef. Meaning, the decrease in product (cattle) is corresponded with new, emerging economies. David Anderson, an agricultural economics teacher at the University of Texas A&M explains the surge in demand for emerging economies like China “One of the things that happens that we see in people everywhere: When their incomes go up the first thing they do is they upgrade their diets, and so that usually means eating more meat.” 

When you look at all of these factors in play, it’s a simple equation of a shrinking supply, higher demand, translating into record-level beef prices. But it’s not just beef that is seeing prices climb, according to CNN all other cow products like eggs, milk, and butter are being effected as well.

With the grilling and barbecuing season about to begin, you might be seeing more chicken, pork, or fish instead of those tasty cuts of beef, as it looks like these record prices are here for the longterm. Experts are predicting that high demand overseas will stay at a constant, so unless California, Texas, and the southwest region see some unexpected summer rain, be careful before selecting your protein.

Sources: http://www.npr.org/blogs/thesalt/2014/04/14/302858835/drought-increased-demand-contribute-to-high-beef-prices

http://money.cnn.com/2014/04/14/news/economy/beef-prices/

Who would have that one of the world’s most popular smartphone companies just a few years ago is now asking itself if it wants to stay in the handset market?

Blackberry has gone from the smartphone that everyone must have with its clever BBM messaging system, where blackberry users could message each other similar to what we now have with iMessages for the iPhone. According to  newly appointed CEO John Chen, Blackberry may be forced to reexamine the types of products it will offer with its dwindling share of the US and worldwide smartphone market. This statement should come to no surprise to the American public who have moved on to iPhones and Samsung phones, and with Blackberry occupying a measly 2% of the smartphone market. 

In an attempt at cutting the cost for the Blackberry, top executives have teamed up with Foxconn, where they will revamp productions on their newest line of phones. Previously the smartphone company had most of its products manufactured on the United States and Europe, and with the move to China, labor costs should help alleviate their $5.9 billion loss in the fiscal year.

Signs of hope?

With a cheaper phone, Blackberry will now be able to compete in the global market, with the iPhones somehow struggling in this area due to higher cost of the phones outside of the US. The reason for the higher cost internationally is because iPhones are not subsidized elsewhere like they are here. Meaning Blackberry is attempting to attain a bigger grab on the low-end devices with their smartphones and tablet. This is something that Apple has been very clear about not doing. But Blackberry’s new game plan does not stop their, along with other phone companies, they plan on tapping into the auto-entertainment as well as healthcare systems. But perhaps the biggest breakthrough for Blackberry is through the messaging that once saw the smartphone hold 50% share of the market during its peak. In the new BB-10 phones, users can now use eBBM, which is a messaging system that does not user the internet like iMessages, but Blackberry’s private network, which also heightens security measures.

One could look at Blackberry’s performance in the past fiscal year and determine that the marketplace has decided that its phones can no longer be the success it once was, but with a new CEO who has begun streamlining the company in order to compete with the smartphone giants,  I think it’s too soon to write off Blackberry… for now.

It’s five o’clock on a Friday in Downtown Los Angeles circa 1995. Bankers and businessman check their watches, walk down to their cars, and drive off to their respective homes or apartments throughout Los Angeles. This was the picture of what downtown used to be, a ghost town with vacant offices and a bleak economic outlook for the neighborhood.

Thanks to the emergence of the Staples Center, downtown is no longer the ghost town it used to be. In the past 15 years the neighborhood of downtown Los Angeles has seen a dramatic rise in the number of businesses that have decided to open up shop . But what is driving this dramatic rise?

Many experts believe the growth was buoyed because of AEG’s Staples Center, which is true, but there are several other factors that were just as effective. For example, the creation of Metro Rail, which brought people from Pasadena into this neighborhood, furthering economic activity. Another factor was the completion of the Walt Disney Concert Hall in 2003. There were many roadblocks from 1987 to 2003, but the necessary funds were collected, and it has brought a world-class architecture project to downtown. So we see an amalgamation of investment through private, public, and philanthropic means along with a coincidence of good timing.

The reason why the Staples Center garners much of the praise for this revitalization is because this multi-purpose stadium hosts over 250 events and around 4 million visitors a year, an outstanding number of people to see the revitalized downtown neighborhood. Now, with the construction of LA Live, there are many pull factors like restaurants and bars that see visitors of the Staples Center come early for the event and stay once the event is over. Before the completion of the arena, downtown was best known for the juxtaposition of skid row and financial businesses. In the early 1990’s, banks located in downtown began to consolidate and merge their offices, thus creating empty office buildings and spaces throughout the neighborhood.

Los Angeles is a city that, despite the economic woes of its state, can be seen as a beacon of hope with a global interest that has seen investment from several Chinese firms as well as Korean Airlines. This sentiment has become increasingly more evident with the construction of the Wilshire Grand building that is owned by Korean Airlines. The Wilshire Grand building will become the eighth largest building in the United States, once completed. Generally speaking, the more skyscrapers and construction cranes a city has, the healthier their economy is. That is not always true, but in this case it demonstrates that Los Angeles, and the booming downtown, want to compete on a global scale. Sure, the rebuilding of the downtown neighborhood has been a slow process since the late 1990’s, however, according to Nate Berg, “many in the city are hopeful that the Wilshire Grand is part of a new wave of investment downtown that will help the city compete internationally” (Nate Berg, The Guardian). It seems as though Nate’s sentiments are justified in terms of the investments being brought to the neighborhood, when there are plans for chains like Whole Foods, retailers like Urban Outfitters, and several local restaurants who have decided to expand to the downtown area.

In order to put the rise of downtown in context of, towards the end of 2013, “Six parking lots in downtown Los Angeles recently sold for $82 million” according to Dawn Wotapka of the Wall Street Journal. A staggering amount of money for some parking lots that have plans to be turned into an apartment complex. This is just one deal of many that have transpired over the past 15 years, and the figures seem to keep rising.

However, the other side of this story is the issue with occupancy rates, and whether or not there are too few apartments or too many people. Wotapka reports, “With more people flocking downtown, the vacancy rate for apartments has fallen. In the third quarter, downtown Los Angeles had a vacancy rate of 3%, down from 3.3%” Along with the dropping vacancy rates in downtown, which means in increase in demand, the consequence is that the average price of rent jumped almost 4% in the final quarter of 2013.

To shed more light and data  on the rise of housing in downtown, Wotanka found, “There are about 14,000 apartment units in downtown Los Angeles. About 5,100 units are under construction, and more than 3,400 units were built between 2008 and 2013, according to Polaris Pacific, a real-estate sales, marketing and research firm. More than 3,000 additional rental units have been approved, with another 7,000 proposed. Meanwhile, there are only 17 condo units for sale and 68 under construction.”

Although there are some concerns that there has been such a vast amount of investment for housing downtown that we could see a drop in prices, the consensus among real-estate executives is that the demand will still stay fairly constant and strong. This prediction is justified by a recent report on the diminishing availability of apartment buildings and the relationship with rent prices. Since 2010, rent in the downtown neighborhood has increased by 18.2% and is still predicted to grow because of the strong demand.

There has been a rush of residents flocking downtown, but that does not mean that it was equipped with the necessary provisions of a typical neighborhood.Another major indicator of the downtown area boom, although it may seem trivial at first glance, is the addition of Whole Foods to the flourishing neighborhood. The development of a Whole Foods in downtown serves not only high-priced, fair trade organic groceries, but as a symbol of the seriousness of downtown as a vital area in Los Angeles. As David Pierson of the Los Angeles Times reports, is “a major development in the neighborhood’s gentrification efforts.” He is not the only one praising the development of the high end grocery store. City Councilman Jose Huizar recently stated, “Downtown Los Angeles is like a city within the city that needs a diverse range of services – including grocery stores,” Huizar said in a statement.  “Bringing Whole Foods Market to downtown is long-awaited news that represents a major coup.”

But Whole Foods is not the only successful chain that has chosen to explore the downtown area. The recently remodeled United Artists Building, now called the hip Ace Hotel, provides another example of what downtown has become. With locations in London, New York, and Panama, to name a few, the expansion to the downtown area exemplifies the “hip” and “young” vibe that the area now exudes.

Downtown has made tremendous strides and has overcome many obstacles to get the state that it is in today, and many real estate executives believe that the best has yet to come for this burgeoning neighborhood. With rising rents and diminishing vacancy rates, an interesting few years are expected to come in the housing market, with several apartment complexes to be completed. However, in retrospect, you have to look back to the addition of the Staples Center, the Walt Disney Concert Hall, the completion of LA Metro rail lines into downtown, and the subsequent development of L.A. Live as the genesis of this downtown explosion.

For Price Agah, being the co-owner of a local pizza place was never something she envisioned herself being at an early age, but sometimes there are opportunities that cannot be pushed away. In her case, it was the combination of her brother and her husband (whom she co-owns Pizzanista with) coming together with an idea for a Pizza place in downtown Los Angeles. And with the combination of luck and good timing on their side, the owners of Pizzanista have established a successful (and delicious) pizza place on the edge of downtown Los Angeles in the Arts District.

One of the main reasons that Price attributes to their success is the fact that the downtown Los Angeles neighborhood is growing and expanding at a rapid rate that has seen many “20 to 30 year old people like us” move into the neighborhood, according to Price and her husband who also live in the neighborhood. However, being a small business owner is not as easy as it has sounded so far, especially in the state of California. In terms of the most challenging aspects of being a small business owner, Price was not shy in declaring her frustration with the figurative “red-tape” that state and city government policies have put in place. When asked about the challenges facing her business that keeps her up at night Price said “I would say that, by far, the biggest challenge of being a small business owner in Los Angeles, well California in general, is dealing with the egregious bureaucracy on a city and state level”. She went on to describe the hurdles and hindrances they have to go through on a yearly basis in terms of the afore mentioned “red-tape” that makes owning a small business in California a “tedious and prohibitive” challenge, according to Price. Perhaps some of her frustration comes from the fact that she mentioned how long it is taking for them to obtain a beer and win license, let alone a liquor license, which is something the owners have strived for since opening in 2010. The other challenges that Price and the Pizzanista team voiced were the normal wear and tear of owning a restaurant, such as management, human resources, training, and turnover of employees.

As with all businesses, there are periods of time where you can encounter ups and downs that are just the natural consequences of the business cycle. However, Price did mention how business for them has not seen extreme dips in demand as she explains that “Pizzanista is lucky in the sense that we are in the food business, and everyone needs to eat!” All jokes aside, there is some truth to that statement, as she cleverly points out that “if we were selling a luxury or niche-product, we might notice consumers cutting back on spending”. An interesting perspective that brings light to her idea that everyone needs food, so demand for their pizza should remain steady if their quality stays at the same level. In terms of seasonal issues with the restaurant, Price explained how Pizzanista usually sees a decrease in sales during the beginning of each month. At first, I found this point a bit perplexing before she went on to explain that “we experience a very light, but still noticeable, decrease in business at the beginning of each month, when most people have to pay rent and other bills.” Not surprisingly, she noted that another dip in demand that they usually face is in August because of the higher temperatures and because their clientele tend to be on vacation during that month.

The last major topic we discussed during the interview concerned the constant fluctuation of prices in terms of their ingredients and the produce they buy. I found it very interesting that on a day by day basis, Price mentioned that “every week they receive updates from our different vendors regarding pricing, and we try to stay abreast of any conditions that affect produce prices.” She added that they try to buy their produce solely from California farmers, but that sometimes specific produce items are unavailable due to factors that are out of their control (e.g. pests, weather, drought etc.) Another obstacle Pizzanista faces is that at the restaurant they have a set menu, which occasionally forces them to buy produce from further away, and sometimes abroad. That being said, Price explains their reluctance to do this because “when we are forced to buy produce outside of California, we normally buy products from Mexico or Central America, which usually come with a higher price tag because of transportation costs.”

Despite the day to day fluctuations of produce, I found the most interesting aspect of this interview was how emotional and passionate Price Agah felt about being a small business owner in the state of California and in Los Angeles and what a “tedious” and “hindrance” the local and state governments can be to small businesses. Perhaps Price is one of many frustrated small business owners who are tired of dealing with the Californian bureaucracy with all of the red tape. Although it was not directly mentioned during our interview, Price and Pizzanista might just move to a more business friendly environment, along with many other business owners, to Texas, which happens to be her home state.