Best Buy steps up digital overhaul as slowdown looms

The electronics retailer has laid off workers and cut hours for some store workers in recent weeks. The company employed around 102,000 people at the end of its last fiscal year, up from around 123,000 at the start of the year, chief executive Corie Barry said on a call with analysts on Thursday. The decline is mainly due to attrition, she said. About 5,000 workers were made redundant or chose to take compensation after their hours were reduced, she said.

The laid-off workers have until Friday to find another job with the company or become eligible for severance pay, according to a “preview of departure notices” given to some workers and viewed by the Wall Street Journal.

“The customer has completely changed the way they think about shopping,” Ms. Barry said on a call with reporters Thursday. “We have done all we can to adapt to the new reality.” After the holiday season, the company felt it “needed to adjust its workforce to match this new reality”.

Traffic to stores and through online pickup fell about 15% in the three months ended Jan. 30, she said, which means fewer sales staff in physical stores. In addition, the company is creating more full-time part-time positions for more flexibility, she said.

Comparable sales, from stores and digital channels that have been operating for at least 12 months, increased 12.6% in the three months ended Jan. 30. The company had announced a 23% increase in sales in the previous fiscal quarter.

Executives warned on Thursday that growth is likely to slow in the second half of this year. They forecast comparable sales of between minus 2% and plus 1% for the new year. On this comparable basis, sales increased by 9.7% during the fiscal year just ended.

The stock was down more than 6% by mid-morning Thursday.

Best Buy is one of many companies trying to leverage the changes in buying behavior brought on by a pandemic and a surge in sales to accelerate a new strategy, sometimes with big implications for grassroots workers.

“As part of Best Buy’s corporate strategy, changes in our operating and staffing model have been implemented to support how we meet customers where and when they need to. us, which is changing rapidly in today’s environment, “said the” dismissal notifications overview. ” by the Journal.

Some store workers said the layoffs seemed counterintuitive after a few quarters of strong growth and tough conditions for employees. “The past six months have been tough,” said Richard Canepa, a 23-year-old who worked at Best Buy in Louisiana for five years, most recently as a full-time sales consultant.

Mr. Canepa remained employed throughout the coronavirus pandemic, including working from home making sales over the phone. Earlier this month, the company gave him the choice to move to a part-time position, which would mean the loss of his health insurance, he said. He accepted severance pay and said he hoped to find a job in web development.

Other retailers who reported strong sales during the pandemic have made similar strategy acceleration plans. Walmart Inc.,

the country’s largest retailer by revenue, said last week it would boost investment in technology, e-commerce and automation after a year of sales thanks to Covid-19. This year “has set us up to get the business where we want to take it and get it done sooner than we planned,” Walmart CFO Brett Biggs said in an interview last week. Walmart is giving raises to some workers such as storekeepers and store workers who collect orders online, while leaving their minimum wage at $ 11 an hour for others.

Best Buy has seen a more marked shift towards online shopping during the pandemic than retailers that sell groceries or other products that shoppers still tend to want to touch and feel. In the last fiscal quarter, its online sales grew nearly 90% to $ 6.7 billion and accounted for 43% of total sales in the United States, nearly double the same period last year.

During the pandemic, the company ramped up online curbside order pickup and moved more store space to warehousing and fulfillment operations.

Part of the company’s strategy is to train more store-level employees to multitask so that they can easily switch jobs or do shifts across multiple stores. More than half of the workers had been trained to “adapt to different work zones,” said Ms Barry, the CEO, in November, and some may add shifts by making home deliveries or working in different stores.

After downsizing last year, “from there, the question is how our employees can go for various skills and certifications so that they can meet the client where they are going,” Ms. Barry said Thursday.

Workers have moved to do more virtual sales as well as chat, phone and remote support, Barry said on Thursday’s call. The company is hiring more people in areas such as supply chain, small parcel delivery and technology, she said.

Store and regional managers have known for over a year that a change in strategy was coming, a Best Buy store manager said. Still, the accelerated pace of the new strategy, its timing, and workers targeted by layoffs have taken a toll on store morale, the person said.

“The holidays have been difficult,” said the manager. “We were working uncertain hours. We were working with potentially infected customers, potentially infected employees. I had employees quit, managers quit for no reason other than what they thought was dying. Around ten workers were made redundant at that person’s store, most of them full-time, the manager said.

“Our stock [price] was soaring, ”said the director. “That’s why we were so shocked that they decided to make these layoffs.”

Like other retailers, Best Buy offered workers a series of bonuses during the pandemic. He raised the starting salary of American workers to $ 15 last August. Earlier this week, he announced he would give another round of bonuses to workers, including those who were recently made redundant. It also offers workers a day of paid vacation as a reward if they are vaccinated against Covid-19, as well as paid sick leave after vaccination if necessary.

As soon as the pandemic struck, Best Buy acted quickly to save money, current and former executives said. Late last year, the company offered early retirement buy-back packages to all company employees over 55, down from the traditional 60-year-old threshold, some of those said. people. Best Buy closed its stores to almost all curbside collection at the start of the pandemic and in April it laid off about 51,000 workers, almost all of them part-time.

In June, he started bringing some of these workers back, but in some cases they have moved their tasks to running online or answering customer service questions from their homes.

Some chains have not weathered the pandemic as well, and e-retailers have struggled for years as more and more shopping moves online. This week, Fry’s Electronics Inc. said it was going out of business, permanently shutting down its 30 stores and shutting down operations.

Write to Sarah Nassauer at [email protected]