Because of the shift to online sales, Best Buy laid off 5,000 employees and is moving to smaller sales floors and fewer stores, among other new tactics.
Best Buy’s online sales grew 90 percent and accounted for 43 percent of its domestic sales in its recent quarter ended January 30, it reported Thursday. Online sales are expected to hover around 40 percent of sales for the coming financial year. Online sales had only a 19 percent share back in 2019.
Best Buy saw a 15 percent reduction in in-store traffic in the recent quarter.
CEO Corie Barry said the chain is moving from being “a big box retailer with a strong omnichannel presence to an omnichannel retailer with a large storefront footprint.”
The company announced it laid off 5,000 full time employees this month and is hiring 2,000 part time employees instead. Also, the chain entered the recent financial year with 123K employees and it left the year on January 30 with 102K employees, largely through attrition.
Best Buy conducted a trial on a third of its stores (340 locations) where it reduced the size of the sales floor and installed warehousing equipment and used the stores as fulfillment centers. Best Buy is also conducting trials at stores in Minneapolis to reduce sales floor square footage and use alternative store layouts.
Best Buy said it will use “higher thresholds” for determining which stores remain open when leases are up. Over the next three years 450 store leases are due for renewal, averaging about 150 locations per year. The chain has closed about 20 locations each year for the past 2 years and expects to close a higher number this year. It’s also signing shorter leases.
In the next few weeks, all hourly Best Buy US full-time employees will receive a $500 bonus and part time employees will get a $200 stipend as appreciation for work during the pandemic. Employees will also be given time off to receive vaccines and to recover from symptoms.
Retailers Take Note
Retailers may again want to note some of Best Buy’s predictions for this year. It sees consumers returning to travel and dining out in the second half and so expects its sales growth to fall at that point. For that reason, it anticipates full year sales growth will range from up 2 percent to down 1 percent.
