Photo: Best Buy
Best Buy connects strong sales to frontline worker performance
Customers returned to recently reopened Best Buy stores in the second quarter while continuing to place online orders at record levels for the consumer electronics chain. The retailer has also made an important connection between its frontline workers and sales performance – demonstrating that taking care of one will ensure good results in the other.
Best Buy released preliminary numbers for its second quarter earlier this week, reporting that sales rose 2.5 percent overall (two percent in the U.S.) and that online sales were up 255 percent year-over-year.
The consumer electronics chain, which first began opening stores to customers by appointment in mid-June with enhanced safety protocols, has continued to experience heavy demand for contactless curbside pickup of online orders.
“Strong consumer demand, combined with shopping experiences that emphasize safety and convenience, has helped produce our sales results to date,” said Best Buy CEO Corie Barry in a statement. “None of this would be possible without the effort and energy of our frontline employees working in stores, supply chain facilities and customers’ homes.”
In recognition of the contributions made by employees to its relative success in the middle of a pandemic, Best Buy announced that it is bringing back roughly half the 51,000 employees, mostly part-timers, that it furloughed when it had to close stores to customers. When the furloughs took effect in April, Best Buy extended healthcare coverage to all furloughed workers enrolled in its plan through Sept. 5.
The retailer, which kept 82 percent of its full-time store staff and field employees on the payroll even as it closed its locations to the public, also made news by announcing that it is raising its starting wage for hourly workers to $15 beginning on Aug. 2. Workers in non-leadership roles making at least $15 an hour will receive a four percent increase as the chain ends temporary bonuses it has been paying in recent months.
Ms. Barrie said the decision to raise wages for frontline workers “reflects an ongoing evolution and investment in how we compensate them for their critical work.” She added, “In the early days of the COVID-19 crisis, we made a number of temporary decisions, including providing appreciation pay to hourly field employees, and we’re now pleased to evolve to a more structural approach that significantly invests in paying and supporting them in ways that they have asked for and so clearly earned.”
Discussion Questions
DISCUSSION QUESTIONS: Do you think Best Buy is likely to emerge from the experience of the last several months in a stronger competitive position based on its preliminary second quarter results and employee rehiring and pay initiatives? Where do you see opportunities for the chain to build its business going forward?
Poll
BrainTrust
Kevin Graff
President, Graff Retail
David Leibowitz
Worldwide Director, Industry Strategy, Microsoft
Investing in frontline employees will make Best Buy stronger, and I’m delighted to see management acknowledge and importantly, invest in their people. For too long, many retailers have under-valued the contribution and importance frontline employees have to the success of the operation. Platitudes are nice, but Best Buy is putting their money where their mouth is, and that makes all the difference.
I watched the video form Best Buy’s CEO when they announced they were furloughing so many due to COVID-19. It’s great to see them back in a position now where they can bring many of those store employees back into stores, just as they’d said they hoped they’d be able to do.
It’s always good to take care of your employees. It’s a hard lesson for retailers to learn, and it’s not quite a silver bullet, but it’s pretty darned close.
If you don’t take care of your own employees, someone else likely will, right?
Best Buy staff are excellent. Every store I have visited is staffed by people who are extremely helpful and very knowledgeable. They are also naturally friendly. That makes it a pleasure to visit stores, but it also means that when advice is needed — which it often is when buying technical products — it is available. This, together with Best Buy’s excellent omnichannel service, has allowed it to hold its own against Amazon and other rivals.
Though more often than not I’d prefer to research it all myself; there are situations when you just want someone to tell you what to get. In fact, I think people do so much of their own research out of fear they’ll make the wrong decision. Could this approach to store staff turn the tide on what consumers can expect of store employees? That they could be genuinely helpful, instead of just incentivized to sell?
Let’s remember that Best Buy has spent years developing their staff and store culture to the level it is today. This was not a C-19 catch up strategy. They were in a stronger competitive position before C-19, and are now stronger than ever. They invested in people and training and culture. And their brand promise and relevance now reflects that very worthy investment.
Even if some of its tactics seemed risky, Best Buy has taken a proactive approach to the coronavirus crisis and that alone is a differentiator. Best Buy surely has benefitted from the work-at-home movement and the opportunity to sell everything from furniture to electronic accessories. I would think that the service end of the business is thriving as well as consumers adjust to not having IT fixers at the ready. Showing appreciation for employees and walking the talk on re-hiring are icing on the cake that should pay off on the other side of the pandemic.
Pleasant, knowledgeable frontline workers are likely the most important connection to sales, whether it is Best Buy or any other retailer. Clearly, Best Buy sales associates need to have the technical knowledge to help shoppers wade through the wide range of choices and prices. I believe a reasonable level of knowledge should extend to all retailers who want shoppers to walk out happy.
I happened to run into a Walmart recently to buy a heavy duty extension cord and after asking three different associates for help, I gave up. I looked up what I wanted on my phone and actually showed the associates that there were four of the brand I wanted in stock, but could not get a straight answer. I realize that not every associate can be perfect, so off to Best Buy I went.
It seems like there is a revitalization of frontline staff at Best Buy and that is a great thing. Pre-pandemic, when I went to Best Buy (and I go often) employees would walk away or not be available when you need help or assistance. I am glad to see that Best Buy invested in their people; this creates not only loyalty by the associates, but a safe, more value-added shopping experience for the customers.
Retail is a game of being brilliant on the basics. Make your employees’ day, they’ll make customers’ days. Treat employees as disposable, suffer the consequences.
I noticed on my visit the other day, three different associates stopped by asking I needed help, and offered to place online orders for out-of-stock items. The Geek Squad is another area which is heavily personnel dependent.
Amazon can no longer differentiate based on not collecting sales tax; the differentiation is in immediate gratification and customer service. Product assortment is key and ensuring in-stock availability for high velocity items would be critical in addition to good sales people in the frontline.
It’s a great step, but winning retailers will likely start to reimagine frontline workers. Is it necessary for the frontline to be in the store? Possibly not.
Sony, for example, recently unveiled remote TV consultations to enable easier shopping from home and direct to Sony experts.
Best Buy and others could reinvent the customer/associate experience with remotely enabled digital consults too. When done effectively, the “frontline” can be staged from anywhere: the store, the call center, or the home of the expert.
If you think about how few employees are actually manning the checkout station at a Best Buy, they’re already well-positioned to capitalize on the reinvention of the store associate. With dozens of Blue Shirts roaming the store, they can be a true asset for customers instead of just waiting for someone to walk up to the checkout.
Thrilled to see this story here today. It’s been shockingly quiet on the media front on the positive impact frontline staff make. The leadership team at Best Buy “gets” the importance of store staff, and has for a long time. They’ve invested in them consistently every year. Every other brick and mortar retailer needs to take note: Invest in your staff, or watch your top and bottom lines disintegrate faster than ever.
Best Buy’s results show that it’s continuing to do the right things as a leading omnichannel retailer. It is benefiting from being in the right category for the times, but also for its continuing investments in delivering a better customer experience. Integral to doing so is investing in more than technology and digital acceleration, as it’s doing, by investing in its employees tasked with delivering that CX in-store and in other customer-facing channels.
As Bob Phibbs appropriately points out, echoing Fred Reichel who in “The Loyalty Effect” eloquently illustrated the connection between employee loyalty and customer loyalty, “Make your employees’ day, they’ll make customers’ days.”
The following statement from Charlie O’Shea, Moody’s retail analyst, was emailed my way.
“Best Buy’s preliminary Q2 sales results, with stores only open for a relatively brief period, reflect the importance of its products and the effectiveness of its multi-channel model, especially the two percent positive comp, which occurred in addition to explosive 250 percent+ online growth. The decision to increase employee pay, despite potential for increased costs, is a positive as it will preserve Best Buy’s consultative sales force, which we believe is a critical competitive advantage against Best Buy’s core competitors.”
The last mile of the shopping journey is now more important than ever, and Best Buy recognizes the role store associates play in ensuring last mile excellence. I congratulate them on their recent success, and I commend them for the investments they are making in future successes by rewarding their frontline workers.
Yes, these times of stress are what often separate the wheat from the chaff. And Best Buy has, through its curbside pickup, safe and organized stores, and employee satisfaction, proven itself to be wheat. Also, the mere fact that some retailers won’t survive betters the competitive position of those who do.
Companies can see their employees as an asset or as an expense. One of the changes that COVID-19 as brought about is more companies realize that their employees should be considered and assets worth investing in. Best Buy’s actions show that it realized its employees were an asset, including the oft forgotten frontline staff. This will place them in a stronger competitive position going forward.
Best Buy will emerge as one of the winners from the COVID crisis as they have put both their customers and their employees first in many of the decisions they made. From a customer side, loyalty to the brand will occur and their business will continue to grow.
I’m so frustrated by the Best Buy Geek Squad experience right now I probably shouldn’t comment lest it gets worse. The only thing that has preserved my sanity while sans computer is the brilliant work of the GM at our local Best Buy. Honestly trying to work with anyone below her was impossible. So I hope the company does more than give a pay raise to employees … a lot more training would go a long way.
Finally, and you didn’t hear this from me, if you’re an Apple/MAC person stick with the Apple store and service. Buying a MAC from and getting it serviced by another retailer is like asking a dentist to do your heart surgery.
Best Buy appears to have addressed the critical staffing factor of involving frontline workers in its pursuit of customer delight. There are two aspects of the involving process — cultural and educational. The cultural part creates an environment that makes people feel good and enthusiastically supports their quest to delight customers. The educational component prepares these enthusiastic players to constantly and consistently delight current and potential customers. Best Buy has done both during this pandemic. These two factors, along with reasonable compensation, have made a difference in the short term and may be a formula for success going forward for Best Buy.
Employee investment has shown to pay dividends. Companies like Costco, Walmart, Target, Albertsons, BJs, Amazon et. al. also have increased pay to $15/hr or more, so Best Buy’s move here is in line with competitive trends. Retailers highest cost is labor, and it’s also their most prevalent resource — enabling word of mouth marketing, internal sales, brand ambassadorship and good customer service. All are critical differentiators in today’s market.
Best Buy has broken even with the pay raise, so not a substantial change here, but what they are doing in terms of training and expanding other services are what will keep them ahead of the curve. Their smart moves will further enable the innovative and powerful services like Geek Squad, which is offering up in-home services again if employees volunteer for it, and contactless curbside pickup.
If these trends continue, Best Buy could come out stronger on the other side of this pandemic than before. Corporations often undervalue their frontline employees, either on merit or pay (or both). Best Buy has stepped up on both and they are reaping the benefits.
Best Buy may be the industry example for recognizing that essential employees are most often customer-facing and how making a strategic investment in these MVPs may give your company–and your customers–a better experience.
Best Buy has done a fabulous job of investing in their frontline associates. They were prepared for the pandemic and made good decisions throughout. After years of not shopping them, I’ve found myself back there more often over the last year and been pleasantly surprised at the changes.
This is not rocket science. I still wonder why there is even a debate, and there are countless academic papers available to help organisations make the right choices, plus of course Zeynep Ton. However, does seem to be the case that “cutting corners,” myopic thinking and the short term are too often the victors in the C-suite debates of all but companies such as Costco, Best Buy, Mercadona, Trader Joe’s, etc.
For an industry that hasn’t consistently invested in their frontline people as much as it was needed to satisfy customers, Best Buy will be in a tremendous position going forward. The customers benefit from happy associates.
In the toughest time, they showed that they had the guts to put action behind their words that they truly DO “care.”
Imagine how loyal those employees are to this leadership now? Bravo, Best Buy!
All employee training will benefit the bottom line and if Best Buy is adapting to new consumer purchasing behavior, they will gain momentum as we eventually exit pandemic safety rules.
There are other factor benefiting Best Buy right now as well: shelter-at-home makes home entertainment systems, computer systems and ancillary products desirable purchases and the retailer squarely occupies that space.
Making continued investments in store staff underscores the journey Best Buy has been on the last several years. It’s not simply about offering the lowest price; consumers are also interested in the experience delivered along the way. Having well-trained, well-paid staff is key to delivering those types of in-store experiences that consumers crave.
Best Buy’s success in treating employees not as hired hands, but as trusted partners, has been replicated by many other businesses. These Forbes and Harvard Business Review articles provide more background.
I give Best Buy a 100% chance of emerging stronger because of their actions and view of the frontline workforce. It’s incredible. Great businesses are built on the foundation of their people. I have no doubt that the opportunities for Best Buy to build its business will come from those people. When they feel supported and engaged because the organization truly cares about them, they offer ideas and insight from their direct connections to customer. If the organization listens to those ideas, the seeds of growth will get planted and take them places they couldn’t have imagined.