Tough times continue for Best Buy. The latest news is that the company’s cash-flow expectations were lowered because payments on inventory had to be made earlier than expected.

This was not Best Buy’s fault. It received inventory sooner than expected and had to pay for it sooner too. But this perpetrates the negativity surrounding the Best Buy brand.

The overarching problem with Best Buy is that nothing has been done to stabilize its brand. On top of that, the company refuses to adapt to the changing competitive landscape – which brought down Circuit City – and is fending off takeover bids from founder Richard Shulze.

The Best Buy brand extends only as far as one of its blue-shirted employees can take it. Online retailers have been devouring Best Buy’s market share. That cannot be attributed only to the overall woes of brick-and-mortar stores. Apple outlets, by contrast, are packed with customers.

The responsibility of any company with brick and mortar is to create enough of a brand that it becomes a destination. Best Buy should reexamine the experience its brand creates and figure out why it is no longer meaningful to its customers.

Why does the Best Buy customer use Best Buy? Why do others reject it? Who does the Best Buy customer believe they are? How does Best Buy reflect that? Is the Best Buy customer seeing Best Buy as easily interchangeable with other stores like Target or Walmart and what is driving those feelings?

These are important questions. The fact that little has changed at troubled Best Buy indicates that the critical questions are neither being asked nor answered.

Best Buy’s future is gloomy, unless it examines its brand closely.

I hate to harp on Best Buy yet again, but boy, when it rains it pours. Best Buy CEO Brian Dunn unexpectedly resigned due to a personal conduct investigation underway and all I could think was what a lucky break it is for Best Buy.

Not lucky in the sense that he was bad at corporate management or that he was a bad person (I guess the personal conduct investigation will clarify that). No, the only way I can evaluate Mr. Dunn is through the perspective of brand. From that perspective, Dunn was failing.

When Stealing Share rebrands companies, as much effort is put into the internal corporate culture of the brand as into the customer facing portion. If they do not occur in tandem, the customer sees the brand as hollow and fake. Before a brand can become important it must first be believed.

As I’ve said in recent blogs, Best Buy confuses its awareness with brand equity. The detriment of this confusion is that brand provides clarity and, in the absence of it, Best Buy suffered. Dunn focused too heavily on best practices and, as such, the brand of Best Buy became only as valuable as the lowest common denominator. Importance flows like a river, high to low. What a CEO believes is important becomes important at the ground floor. Brand must be the driver for the new CEO or Best Buy will continue to hit the same obstacles it is currently trying to clear.

A new CEO focused on brand also ushers in a new corporate culture. A big problem with promoting best practices (beyond their lack of meaning with the customer) is that they are not emotional and are the table stakes in which you must have just to play. But they do not create preference. They also give employees little reason to care because they are difficult to take personal ownership of.  As a cooperate culture, it is much easier to live something like “Think Different” than it is to live “best price.”

Best Buy’s Board of Directors should look at this resignation as a fresh start. Wipe the slate clean and take a new approach. Recognize that what Best Buy is missing does not center on operations, but rather on brand. Best Buy is down, but with some meaning it will not be out.

Things are not looking very good for Best Buy. Its last quarter, which ended March 3, had it down by $1.7 billion, a figure even more disheartening when you consider that the loss included an additional week of sales to help soften it. Best Buy’s answer to the poor performance is a shift toward fewer big-box locations and an increased amount of mobile locations. There is one problem with the strategy however. Whatever issues it has with the big-box stores will be the same for mobile stores. Neither has a clearly stated reason for being nor a compelling enough message to establish brand loyalty.

The problem with Best Buy’s current big-box stores is that you can get everything they carry elsewhere. Its brand is not special nor are the products it sells, making it just a store rather than a destination.

Sure, it has a large selection that lets you get all your electronics/appliance shopping done. But how many people go out to buy a TV and a fridge on the same outing? Typically, you either go for one or the other. (Or you go to Costco.) If you are in the market for a fridge, Best Buy just joins a long list of stores whose value is also simply “a means to an end.”

On the other hand, if you want IKEA furniture, you go to IKEA. If you want a MacBook, you go to the Apple Store. There is value in IKEA and the Apple Store because of the experience, the focus and, most of all, having brands that offer something of greater value to the consumer than price. Best Buy is not a very pleasant shopping experience. Nothing it sells is particularly special, and it uses the rather emotionless value of price as its brand.

So are mobile stores going to be any different?

The problem with transitioning to more mobile stores is that too many mobile stores exist and Best Buy’s brand of price is not meaningful enough to increase usage beyond their stores’ proximity to consumers. AT&T, Verizon, RadioShack, the list goes on. Mobile stores already saturate the market.

Best Buy’s success does not rest in adjusting the size of its stores. It rest in adjusting its brand. Downsizing the stores is just addressing a symptom. It’s not addressing the cause.

Instead, Best Buy must decide who is it for and who is it not for. What does the brand promise? Best Buy is confusing its brand awareness as being meaningful when it is preference that signifies brand equity. The reason Best Buy is closing stores, laying off employees and switching to a mobile store model is because it hasn’t redefined its brand and used that to dictate structural changes.

Otherwise, it will soon become as irrelevant as RadioShack or, gulp, Circuit City.

In a recent blog about Pepsi, I mentioned that only brands with different values than the competition can steal market share. Brand works in collaboration with this value by providing a meaningful context so its meanings become more intensive then the claims of the competition. I have, for a very long time, been very critical of RadioShack, or “The Shack” (which it is only using sparingly anymore). I could never pinpoint RadioShack’s differentiator, nor could I find brand meaning to help me overlook the absence of it.

The biggest problem for RadioShack is that it has identity issues. “Radio” is just a wee bit antiquated and I have yet to meet someone who conjured up a positive image when they thought of a “shack.” Now that we live in a different technological age, RadioShack just does not know what it wants to be when it grows up.

The in-store setup of RadioShack, in theory, reminds me of a boutique because of its relatively small size, which usually means focus and speciality. My wife is fond of shoe boutiques because she can get special and hard to find pairs of shoes. Some of those small boutiques even get early runs of an item so that the same design found at a Neiman Marcus might actually be made with a slight nuance.The point being, a boutique experience feels special.

RadioShack however does not feel special. In fact, almost all of RadioShack’s selection is lackluster. Sure, it has TVs, but it carries only about five of them. Need a videogame? Don’t go to RadioShack, it only has a handful to choose from. Its selection might increase when you look online. But if you are an online shopper looking for best price and biggest selection, wouldn’t you just use Amazon or someone else?

RadioShack has not put a stake in the ground, either from a brand perspective or product perspective. With so much left undefined by the company, it forces the consumer to create meaning and value (or in this case a lack of it) on their own.

RadioShack is not completely doomed. It just needs focus and a reason for consumers to choose it. It needs a better understanding of the consumer. If its recent “the shack” campaign is telling of anything, it is that a change needs to be drastic and needs to happen urgently.

Film has done it. Television has done it. Music has done it. I’m speaking of the shift towards digital distribution. Gone now are the Tower Records and Blockbusters, replaced by Netflix, iTunes, and Hulu. It is a path that, given the consumer’s need for instant gratification and their wireless lives, is a natural progression.

What then does this mean for GameStop if/when this trend makes its way to game consoles?

GameStop has a strong presence in the market. It has a lion’s share of all games sales and its wide distribution of used games has helped it grow the market in the process. Gamestop has its own magazine, thousands of stores, and a strong media presence. But it all is at risk if the console market transitions to digital distribution. Given the progression of other industries using similar media formats, that seems likely.

This brings me to the importance of brand as an idea rather then brand as simply a description of benefits. GameStop’s themeline, “Power to the players,” is a bit more about Gamestop than about the customer (Gamestop is “giving” the power). But at least it does not limit what the value to the customer is. “Power to the players” gives enough permission to Gamestop to create value in new areas, provided it remains consistent to message. It would have to explain that digital distribution is giving players power.

If digital distribution is the future of console game purchasing, it means success as a digital distributor depends heavily on market presence, brand permission and, of course, brand identity. In thinking about who could best meet that criteria, GameStop seems best suited of any in the market. But only if it takes advantage of timing and its current position.

Walmart has presence and the brand, but lacks the permission. Best Buy has presence, a little permission, but its brand is lacking. Onlive certainly has permission, but is short on presence and its brand is still evolving. Steam has permission, enough of a brand, but is short on presence, especially when you consider its lack of a presence in consoles.

GameStop is the only one with permission, presence and a brand. Its brand still needs work, but it is at least playing the right arena.

The risk for GameStop is the folly of Blockbuster. It must understand the business of its brand and not just the business of its business. Gamestop appears to see the importance of the digital shift from its purchase of Impulse, a digital distributor of game titles for the PC. Gamestop cannot be slow at leading the market change. If it is not the first mover, its presence will be reduced too much for it to respond effectively.

One of the greatest branding faux pas a company can make is failing to deliver on its brand promise.

Let’s take Best Buy, for instance. It is a company whose name alone suggests a brand that is your “best alternative” for electronics. This, however, is a branding promise that is hardly the truth and has led me to the assumption that Best Buy is hardly the “best” in anything that it does. That’s especially true when it comes to customer service, satisfaction and shopping experience.

Before I delve into my own Best Buy holiday shopping horror fiasco, let’s look at its recent online holiday shopping debacle.

As The Wall Street Journal reported a few days before Christmas, Best Buy was alerting customers that it couldn’t fill online orders. The crux of this situation was that droves of online customers turned to Best Buy to fulfill their shopping needs for Christmas. (Best Buy called the amount of online shopping “Overwhelming”).

The overwhelming response was a good sign for Best Buy. To stay relevant, it must combat the Amazons of the world as well as other prominent online retailers. Yet, Best Buy failed to deliver — and failed to do so during the most important retail time of year. Now, those hordes of hungery customers will most likely turn elsewhere next season. I surely would.

My personal experience didn’t go any better. Just a few days ago, my flat screen TV went kaput. I was really bummed out, of course, and quickly opted to hit Best Buy to get a slightly better replacement. In retrospect, I really should have gone to Costco as I would have saved time, and my shopping experience would have been much more positive, believe it or not.

Let me run down a list of what made Best Buy more like Miserable Buy.

1. It took 40 minutes to get any attention from an employee.
2. It took Best Buy four attempts to find me in the computer system. After the fourth attempt, I told them to “forget it.”
3. I had no idea which TVs were still available for purchase and which were not.
4. Having finally found a TV, I paid. I waited in my car at the loading dock for 20 minutes. Having lost patience, I returned to the employee who rang me up and asked where my TV was. To which the employee asked, “Have you paid?” I responded, “Yes! You rang me up!”

I wonder how can a company like Best Buy, with customer service as dreadful as this, truly look you in the eye and expect you to believe its promise of being the “best” of anything. I don’t believe it anymore? And, as its online and in-store shopping experiences continue to wallow, more customers just may purchase their products from a company who has the capability of fulfilling their brand promise.

We all could see this coming. Best Buy has become the latest retailer to change its business model after technology has changed the we we live our lives. Blockbuster went bankrupt (only to be recently purchased by Dish Network). Circuit City went belly up. And retailers like FYE have reduced the size of its stores to that of a walk-in closet.

Best Buy, coming off a nearly 5% drop in sales, announced it is reducing the size of its stores by 10% – read: reducing staff – and expand its Best Buy Mobile stores that focus on service, as well as renew focus on online sales.

This is a fine first step and all to adapt to today’s ability of the consumer to buy hardware, software and even content through the Internet. Today’s retail world is about the consumer not being tied down to a brick and mortar building more now than ever.

The question, of course, is whether it’s too late. It has always shocked me by how slow Blockbuster moved to adapt, thus failing. The demise of Circuit City was remarkably swift. Even Walmart is reporting a drop in in-store electronic sales.

My belief is that Best Buy will never be what it was once, because nobody can. The control of choice and time has shifted to the consumer and retailers like Best Buy look outdated if they don’t radically change. More than that, consumers are embarrassed to enter one of the outdated brands. For the last few years, going into a Blockbuster was akin to being in the witness protection program. You didn’t want to be seen because it meant you were behind the times.

At least Best Buy has something of a brand, something few in the retail sector do. It has permission to change because its brand is based on purchasing and value. But it is in serious danger of feeling outdated because the brand is still about the retailer, not the consumer.

To make this venture – and, no doubt, other ones to come – Best Buy must modernize its brand. Shifting the business model is nice and all, but it’s not enough and time is running out. Without a change in meaning, this shift just means the drop in sales will continue – just more slowly.