Photo: Best Buy
Digital gains are changing how Best Buy puts its associates to work
Best Buy last week laid off some in-store workers and told others their weekly hours would be reduced as digital increasingly drives the chain’s sales growth, according to The Wall Street Journal.
One employee told the paper that he quit because he could no longer accumulate enough hours to qualify for insurance.
“Customer shopping behavior will be permanently changed in a way that is even more digital and puts customers entirely in control to shop how they want,” Best Buy said in a media statement. “Our workforce will need to evolve to meet the evolving needs of customers while providing more flexible opportunities for our people.”
Best Buy’s third-quarter comps jumped 23 percent, driven by a 174 percent spike in e-commerce. Online sales doubled to 35 percent up from 16 percent a year ago.
On Best Buy’s quarterly call, Corie Barry, CEO, said that with the accelerated digital shift, the chain is piloting numerous labor and store initiatives. This includes positioning about a quarter of its U.S. stores as hubs to support significantly more online order volume.
Management’s efforts to create a more “flexible workforce” and/or having staff handle multiple roles is expected “to drive efficiencies in labor planning and cost.” A computing specialist, for instance, could take a shift in the mobile department or home delivery.
Ms. Barry said Best Buy is also “evolving the way we position employees to serve customers based on need, irrespective of channel.”
Toward that end, the company has cross-trained about 450 store associates to help customers via phone and chat as those types of interactions have been “significantly higher” during the pandemic. Another 5,000 are also being trained to “flex into digital sales, if needed, based on demand,” Ms. Barry said.
Digital has likewise become a “meaningful percentage of the mix” of Best Buy’s consultative services, although home visits still make up the majority.
“As we improve the technology and experience for digital interactions, it opens up the opportunity for our advisors to reach even more customers,” said Ms. Barry. “Fundamentally, our strategy and competitive advantage depends heavily on our people and the differentiated service we provide our customers.”
Discussion Questions
DISCUSSION QUESTIONS: Do you think Best Buy’s move to trim in-store staffing is more about adding flexibility, de-emphasizing traditional in-store selling roles, or a bit of both? What kinds of customer-facing retail jobs do you see gaining more importance in the years ahead?
Poll
BrainTrust
Bob Phibbs
President/CEO, The Retail Doctor
Ricardo Belmar
Retail Transformation Thought Leader, Advisor, & Strategist
This announcement rubs me the wrong way. The company just delivered excellent results, and their employees are being rewarded with layoff notices – in an economy that has significant unemployment? I well understand the rationale management is describing, but where does the commitment to employees come into this? I would certainly understand if Best Buy was under financial stress, but that’s not the case. How employers treat employees – in both good times and bad times – says a lot about the company and its true culture. This recent announcement by Best Buy speaks volumes.
Best Buy is responding to the new customer journey where the role of the store is changing. The dramatic shift to online shopping, for Best Buy and most every retail segment, is forcing brands to rethink the store and how service is provided to best meet customer expectations. Customer-facing retails jobs will likely evolve to more consultative roles, especially for complex products such as technology.
There has been a big change in how consumers use Best Buy. More business is being done remotely and while stores are still playing a critical role in fulfillment and some aspects of service, customers are shopping them differently. Best Buy has a responsibility to adapt and has been doing so through testing new store formats. Optimizing staffing levels is another part of the rebalancing equation. Hours reductions and lay-offs are unfortunate, but they are needed if Best Buy is to remain fit and healthy over the longer term.
The timing of the announcement comes as Best Buy closes what has been a very successful fiscal year. That looks jarring. However the company has to look forward and assess its needs in 2021 and beyond.
Thank you for your help, now here’s the door. Big retail is moving from training soft skills to having people manage tasks. As bigger cities empty out and employees feel used turnover will skyrocket, mark my words. And when online isn’t the captive darling of the pandemic, and shoppers return to stores, will those Best Buy stores look more like Sears or Circuit City did as they cut staff thinking no one would notice?
Ouch!
On the surface I agree 100 percent that we will see some changes in store roles. Keeping in mind that the vast majority of business in retail, throughout the pandemic and into the near future, still happens in a store. I anticipate that there will continue to be a strong need for basic blocking and tackling – unpacking trucks, stocking shelves and serving customers. Now there’s new emphasis on supporting digital sales and new fulfillment capabilities. Great. I applaud Best Buy for really turning around business before the pandemic, and their outstanding success during it. Their success should be providing more opportunities for the employees who supported their success, and maybe this is going to be the case.
But reading between the lines:
“Our workforce will need to evolve to meet the evolving needs of customers while providing more flexible opportunities for our people,” and “to drive efficiencies in labor planning and cost” starts to make me wonder if, despite their success and record profits, they’re falling back to a pattern of eliminating benefited positions and cutting labor costs only to boost their financial results. I hope that’s not the case, time will tell.
You can put lipstick on it, it’s still a pig. The company has good numbers but in order to keep up those profits, they are trimming some staff and re-assigning others. It’s not a flexibility play or a shift-to-digital play per se, it’s a profit play. More digital often means fewer associates.
Yes, and more digital is not driven by the company, but by the customer.
I disagree that more digital means less. There are strategic imperatives for retailers to change and it’s not just profit taking. There will be changes based on geography, store functions and more. There is a shift for retail and they need to embrace the move towards a digital-physical future. Digital introduces higher demand for employees, especially in warehouse, distribution and supply chain. Customer service, logistics and scheduling become sought after functions. Many studies support the drive of ecommerce to increase overall employment, as in this example.
A great read to understand this better is this McKinsey report.
The report speaks to the inherent shift in tasking for the UK retail market specifically, but really taps into understanding automation and retailing of associates and other employees by retailers. The general trend is not all negative as first glance might suggest.
In the Best Buy case, it’s not profit taking by greedy management. There is a shift to omnichannel culture- or rather no-channel culture where employees are more generalized. This process of cross training may cost more than maintaining workers given the training industry’s billing by employees structure. The good thing here for Best Buy is that they’re moving from a fixed, high turnover model to something closer to a Costco labor strategy. I expect those employees retained will not only have broader training options, but also higher comp over time because they’re more important to the company. As CEO Barry mentions: “our … competitive advantage is based on … differentiated experience” and the people are the delivery mechanism.
Ananda, I agree with you. Digital doesn’t mean less, it means different. Change is here to stay, resilience is the success measurement of importance now. My caveat is when they use the word “flexible” to mean fewer hours for employees to get them below the benefits threshold, and fewer structure hours making employees more on call than shift work. Which is cheaper for the company, but difficult for team members to manage.
Expecting a smaller workforce to take on multiple roles requires the retailer to do a very good job of training. Training its employees is not something for which the retail industry as a whole is known. Those who do it very well turn out to be the leaders. If Best Buy can pull that off, they have a chance at success with the new approach.
The discussion is really about — what does a brick-and-mortar sales employee look like? Of course a proficiency in customer service and sales is needed but a digital acumen could become a critical hiring prerequisite. Will retailers incorporate technology and digitization from their corporate teams and lean on the on-store employees for clienteling and more? The smart ones will.
You still need associates to maintain the increase in digital – curbside pickup, online help, BOPIS, etc. I do not know if the store associates needed to be laid off as many locations are still working on getting up and running on supporting the increased sales in digital.
As part of any digital transformation, there is an accompanying organizational transformation, which shifts and evolves the associates’ role and significance. While there will be some short-term job reductions, considering how successful Best Buy has been before and during the pandemic, there will be an increase in hiring to address the digital-first customer strategies.
As consumer behaviors continue to shift and evolve, Best Buy’s operating model has shifted to a digital-first strategy. Best Buy has been one of the modern success stories of a company on the verge of bankruptcy yet had the courage, discipline, and determination to shift the entire in-store and digital experiences to address a changing consumer landscape.
The expectation is that the store associates will remain a critical component of the Best Buy experience and receive the proper training and support to execute against Best Buy’s value proposition.
We’ve been talking about the future role of stores for years. The shift in lifestyle from COVID-19 has accelerated the prior slow/steady growth of digital sales and stores are adjusting–good or bad. Even if the virus was gone tomorrow, stores are not going to recapture 100 percent of prior business now that COVID-19 has pushed consumers into more comfort online.
How those adjustments are made and what personnel moves where (or not) is another topic. It sounds like Best Buy is creating employee friction by not sharing a vision and not keeping employee welfare front and center in their digital reorg.
Good points Ken. Imagine being one of the employees who didn’t get laid off — so we work really hard, deliver great results and we can still get laid off? Yeah, this is a company to build a future with…
Best Buy is responding to market changes that are inevitable. Over time, the new hiring to support their digital business in remote customer support, fulfillment of online orders, etc. will surely eclipse the loss of jobs they are seeing in the actual stores. Many companies have to re-tool and Best Buy is most likely putting a proactive foot forward. Given the pandemic and difficulty for the families losing jobs, this comes at a bad time, so there could have been a more gradual approach.
That’s funny, I distinctly remember Best Buy saying their blue shirts were their most valuable assets and having human contact separated them from the competition, like Amazon. Guess not. Having just gotten off the phone after a half an hour trying to contact a human being at a certain retailer, I find this move sad and ironic all at once. Ex-Machina, here we come.
All retailers will have to face the changing nature of their business as increases in online sales have accelerated by 10 years during the pandemic. However that does not devalue store staff and retailers must ensure that they are well trained, well motivated and able to serve the customer in a way that will bring shoppers back, whatever channel they are in. Yes, staff will have to be more flexible and understand the various channels and how to work across the retail offering. But retail will now more than ever need to be customer-centric, delivering theater and great customer satisfaction if they are to thrive. Staff are absolutely key to that.
My ongoing criticism of the retail industry (and all industries) has been the propensity to cut costs by cutting labor. Over the years it has been a signal that the company is or soon will be in deep trouble. The companies cut at the bottom, not at the top, yet the productivity is generally at the bottom.
This is probably not the case with Best Buy. Surely they do not have a profit issue. Their decision is strategic, operational and forward looking. Companies are not charities. If the demand for labor’s services no longer exists, they should be eliminated.
Smart companies, sustainable companies are always looking at the trends of their businesses and balancing their workforce with the needs of the business. Best Buy is moving toward a much more profitable business model, one that most retailers should consider.
I think Best Buy’s move to trim in-store staff is to address the shift in how shoppers are interacting with Best Buy. If sales volumes are shifting to BOPIS or ship-to-home, in theory, fewer people are needed to roam the aisles. The people you do have in-store should be more versatile and able to help in purchase decisions. Was this swinging the pendulum a little too far? Hard to say at this point.
I am curious what shopper behaviors are. Are people coming into the store to browse models and then going home to place an order for future pick-up? Or are they doing research purely online based on trusted sites and ratings/reviews and not visiting the store? To me it seems the store is a differentiator.
In this commodity space, Best Buy would be wise to beef up Geek Squad and, as mentioned in the above, get more support online via chat or video to help the shopper. Seems like a race to the bottom unless retailers like Best Buy come up with uniqueness to shift the conversation beyond lowest price and quickest fulfillment.
I’d have thought that more digital online/chat help would necessitate more associates being available, but I guess the numbers don’t add up. Pursuing customer-facing retail as a career is certainly in a downward spiral.
Best Buy’s move may be a good one financially gives the impression of being coldhearted. The publicity around the move may not sit well with the current and potential customers base, but I doubt that the number who will stop buying from Best Buy will make a significant dent in their sales.
De-emphasizing in-store selling roles is never a good thing. I believe Best Buy is shifting its business online as it decreases showroom space and staff to curb expenses.
A shift to local micro-fulfillment centers and dark stores is everywhere. I think Best Buy will become enveloped by this shift as they move to smaller brick-and-mortar stores in local communities.
However I believe you have to be very careful when “cross-training” employees in-store or online. I understand how Best Buy wants to create more employee flexibility and efficiency, but there are many dangers with this path. The adage of trying to please everyone and delight no-one is definitely in play once again with this strategy.
In today’s world of consumer-driven customer experience and service, expectations are extremely high. It might be difficult for these multi-taskers to satisfy the new consumer’s needs by knowing a bit of everything but not a lot of one thing.
Today, specialization is key. Customers don’t like being handed off to another person or department when an associate can’t answer every question they have. As we move forward after the pandemic, I believe retail jobs will become more abundant online today and in the future, where face-to-face personalized experiences will be the norm.
Of course digital is up. The COVID-19 experience has scared a lot of people away from going into stores and, rightly so, digital is up. However there will be mountains of people, like me, who want to come in and speak with an expert, because I am not an expert. Thus the opportunity for an add-on sale is probable, if a proper associate is talking with me. And the thought of having someone tell me my sales expert will be with me in a few moments after they finish gift wrapping a television for a customer won’t work well for me. Don’t throw the towel in on me with that response. And also, “A computing specialist, for instance, could take a shift in the mobile department or home delivery” … does not work, it actually scares me. And by the way, customers are coming back with expectations they hope to have fulfilled.
Just when Best Buy crossed the chasm of great in-store, knowledgeable service they “can” it. For years Best Buy was extremely annoying to shop as the staff was not trained to educate or give personalized product recommendations to in-store shoppers. That all changed in the past couple of years. The retailer has developed amazing service, has a knowledgeable greeter at the door, and excelled at setting appointments in real-time for walk-in customers. It is important in electronics to have a place to go to speak with a knowledgeable human; it is brilliant. Now it sounds like Best Buy will become a robotic drop-off point for returns. How sad. Just when personally, as a consumer, I was gung-ho on Best Buy. Bye-bye Best Buy, hello Amazon.
“Our workforce will need to evolve.” Well, so will the way the company pays and cares for that workforce. If Best Buy wants to have successful stores, it needs to think very carefully about the type of workforce it needs and how that workforce is treated.
Feels to me like the industry needs more specialization, not less.
This is a tough one because publicly traded companies are judged not on how they perform today, but how they perform tomorrow. Having good quarters in the middle of pandemic, when people are refreshing their home tech because they are stuck at home, means nothing down the road when the pandemic is over and consumers shift discretionary spending elsewhere. It would have been better if they lead with redeployment and retraining for online support for store employees for online first. I wonder if they are seeing internal data that shows rapidly declining employee utilization rate inside some stores as customers switch online with delivery or pickup in parking lot, and when the Sony PS5 cycle slows down they see a cliff coming.
This feels like a bizarre turn of events for a retail brand that has built its reputation on knowledgeable, expert staff that helps customers. Especially one that during its darkest days was known for quite the opposite. When Best Buy embraced the notion that having an expert staff that can deliver more knowledge to customers than what they bring with them on their smartphones, they turned a corner. To come out now and claim that digital is driving them in the opposite direction seems disingenuous at worst, and possibly foolish at best.
If we look at the product mix, one could argue there are fundamentally two types of products at Best Buy:
1) Those that customers research on their own and make a purchase relatively quickly. These are likely digital-first with a likely store pickup or curbside fulfillment. Not as much associate interaction needed. Think most computer and computer accessory products, phones, headphones, etc.
2) Products that customers need detailed help to make a purchase decision and understand how they will use those items in their homes. Think kitchen appliances, smart home devices, large home theater purchases. These may be sold with Geek Squad support and home installation/configuration services and delivery. Certainly, these require well-trained associates both in-store and in-home.
If Best Buy’s message were that they are offering more opportunities for associates to be trained in the second type because they believe more sales will be driven by that category, then this might not be such a disappointing announcement. Unfortunately, it appears that they’re indicating an expectation of more of the first type of sales will occur and therefore they won’t need as many associates overall. That’s not a great message to send customers during a time of significant unemployment. Plus, this digital-first sales analysis may be true while we are still in the pandemic, but once we’re on the other side … it’s not so clear — customers may come back to Best Buy stores in droves and if they do, who will help them?
Let’s hope that BBYs Blue Shirts get the cross-training needed to do multiple in-store roles so their service — a differentiator — stays high. Otherwise, this can be seen as merely a cost-cutting exercise.
Best Buy is doing its best to adapt and follow its customers using existing resources. Retraining employees to focus on digital orders makes sense when those orders are up 100%. Re-using underutilized store square footage as fulfillment centers to help them cover their costs and not incur additional costs also makes sense. These are necessary adaptions to address a doubling of ecommerce orders over a short period of time.
While the article doesn’t state, the change certainly includes reduced store visits. Stores still have a role but reconfiguring real estate and employees to address ecommerce orders is essential for retailers with large brick and mortar footprints to remain competitive and profitable. With time, ecommerce order automation is the next step to ecommerce order profitability.
The role of the in-store associate continues to evolve. Retail already has one of the highest turnover rates across most industries. The focus by Best Buy on cross training functionality allows for associates to be more versatile, takes them away from the drudgery of a repetitive task such as shelf stocking, and introduces the opportunity to engage customers in new ways. Some of this falls into how we service customers and the autonomy that is offered to employees. At the end of the day, 1 well trained, friendly, and excited associate will have greater impact than 3 bored, unengaged employees watching the clock. Moving as much in this direction will continue to change with how customers engage the retailer. Watch as those retailers with employees who are willing to change drive more impact, value, and sales than competitors.
Expect to see more digital interfaces, delivery opportunities, remote engagement/customer service, drop off services at the store, and of course BOPIS enablement. We might even see functions tied to customer white glove treatment becoming more common in uncommon scenarios.
Fairly certain this was financially driven, but there’s no doubt the role of the traditional in-store sales associate was on the decline at Best Buy. Yes, there’s a place for sales associates but not for mainstream brands and especially not after a pandemic. If brands such as Bose don’t need physical stores to move their products, it wouldn’t be any different for Best Buy.
These days, with the amount of product information available, consumers have the ability to be just as informed as the store associates. If they aren’t, they can (and do) search reviews on products while they are in the store rather than seek in-store associates for assistance.
Therefore, I think Best Buy is de-emphasizing traditional in-store selling roles to reduce overall labor costs as store associates aren’t providing a differentiated knowledge-based experience in addition to what can be found online through digital products.