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Best Buy says its staff has been reduced by 21,000 in the past year as the pandemic accelerated the company’s transition to online sales. Most of these losses were due to exhaustion – including workers who were harassed during the pandemic last year and then chose not to return to work. But Best Buy says it has formally laid off 5,000 employees in the past few weeks. The company now has about 102,000 employees – including employees in its retail stores and headquarters.
A company will often lay off workers because it is struggling. The past year has certainly been a challenging period for some brick-and-mortar businesses. This week, for example, electronics giant Fry’s closed all its stores.
But that does not appear to be the situation at Best Buy, which has weathered the pandemic fairly well. In the last quarter, sales of the same store at Best Buy’s brick and mortar stores increased by 12 percent compared to a year earlier. Meanwhile, online sales rose 89 percent.
As a result, online sales accounted for 43 percent of total sales in Best Buy’s fourth quarter, ending January 31st. This is higher than 25 percent in 2019 and 22 percent in 2018. And Best Buy believes that this move will be mostly permanent, with 40 percent of sales in the new financial year online.
Best Buy reduces its physical retail presence
Best Buy says the recent changes are an attempt to adapt to this new market reality. Traditional stores are not going away, but they are becoming less important. Best Buy says it has closed about 20 stores a year for the past two years and expects to speed up the process in the coming year. Best Buy has 450 stores (out of about 1,000) whose leases will end in the next three years. The company says it always evaluates a store carefully before renewing its lease, but in the future the company will have ‘higher thresholds for renewing leases.’ In other words, stores that do not perform will close faster than in the past.
This means fewer workers in general and fewer full-time workers in particular. As it has laid off 5,000 mostly full-time workers, Best Buy plans to add 2,000 new part-time jobs.
Best Buy is also working to increase the flexibility of its staff by training workers to perform a mix of face-to-face and online work. During a slow shift, workers with appropriate training, for example, can call customers at Best Buy’s national hotlines.
Best Buy plans to reconfigure stores to allocate less space to showrooms in front of the store and more space to storage and delivery facilities at the back. Store workers can spend some time helping customers face-to-face and packing orders online.
Some parts of Best Buy’s business are booming
This is all in the context of an overall financial picture for the company. Best Buy executives said in a conversation with investors on Thursday that the pandemic has increased demand for several categories of products that increase Best Buy shares. For example, the company struggled to keep consoles on store shelves because ‘there just wasn’t enough stock to meet demand.’
Remote workers spend a lot of money on a range of work-from-home products, from ‘high-tech chairs to monitors to standing desks’. Best Buy says that printing products are constantly in short supply.
Best Buy also says that home theater equipment and personal fitness equipment sold out quickly as more people practiced and watched movies at home. Kitchen appliances also sold well.
In addition, Best Buy believes that spending is unlikely to decline in 2021. While many workers struggled financially during the pandemic, many workers saw their savings rise because they kept their jobs but could not spend as much. restaurant meals, travel or other luxuries. Best Buy therefore expects the strong sales of luxury appliances to continue until 2021.