Is Best Buy Doing a Circuit City?
Circuit City’s demise
has been tied, in part, to its decision to get rid of its highest-paid
and most experienced store staff and replace them with less-experienced workers
who earned less money. Your classic case of penny wise and pound foolish
Best Buy, for its part,
has been known as the anti-Circuit City for valuing its staff and empowering
them to serve shoppers in the chain’s customer centricity efforts.
So what gives with the
headlines suggesting that Best Buy is pulling a Circuit City-like move
of its own?
According to a note
to investors by Colin McGranahan, a research analyst with Sanford Bernstein,
Best Buy is getting ready to demote up to 8,000 senior sales associates.
The move would result in cutting their hourly wages by as much as 50%. The chain
is also looking to consolidate some assistant store manager jobs that could
eliminate 1,000 positions.
Susan Busch, a spokesperson
for Best Buy, denied the chain was getting ready to do a Circuit City. “We
are not going down the same path,” she wrote to Dow Jones Newswires.
Busch said changes to staffing at store-level were part of the company’s
effort to position itself in light of current economic realities. She pointed
to the company’s decision to eliminate 750 jobs at its headquarters as
part of an ongoing effort to cope with a “global
financial environment … unlike anything we have ever seen.”
She emphasized that
while Circuit City just got rid of its best workers, Best Buy was continuing
to open new stores and create thousands of jobs while other companies were
not. She said affected workers in current stores would be given the opportunity
to apply for positions in new locations opening up. Best Buy plans to open
45 stores in the U.S. this year.
Circuit City did was a pretty big blunder,” Brady Lemos, who follows
Best Buy for Morningstar, told the Minneapolis Star Tribune. “They
let their most experienced sales staff go, and it was clear that people
who worked there weren’t interested in helping you. … Best Buy must be
careful not to do anything to that degree.”
Mr. McGranahan suggested
that store employees’ respect for new CEO Brian Dunn along with a company
culture focused on performance should prevent any major problems within
Is Best Buy following in Circuit City’s footsteps with this staffing
move? What does management at headquarters and in stores need to do to
keep workers feeling positive about their place within Best Buy? How
will consumers react to this news?
- Best Buy Staffing Move Likened
to Failed Circuit City – Dow Jones Newswires/TwinCities.com
- Best Buy
slashing wages, eliminating jobs in stores – Minneapolis Star