Best Buy shifting to smaller stores amid omnichannel sales surge
Best Buy CEO Corie Barry told analysts that the retailer has cut 5,000 mostly full-time positions while adding 2,000 part-time jobs, which were offered to many of those cut from full-time roles.
"At an aggregate level, this was due to having too many full time and not enough part time employees," Barry said in a Thursday conference call, according to a Seeking Alpha transcript. The cuts followed a 17% reduction in workforce over the previous fiscal year.
Barry also noted that the company plans to close more large format stores, with plans to accelerate beyond the 20 annual stores the retailer has closed in recent years.
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Barry pegged Best Buy's job cuts to a changing operating model that prizes flexibility. The result is a more part-time workforce that does more things for the retailer as it looks to adapt to a more digital-based selling environment.
"It is important to add that we are intent on rescaling and retraining employees wherever possible, so we can retain our people and employees can flexibly work across all our channels," Barry said.
The chief executive pointed to how some employees over the past year worked across various parts of the business, including virtual sales, chat, phone and remote support. The company is also hiring in supply chain, parcel delivery, customer care and technology support, among other areas.
Employees might fulfill curbside orders, take customer support calls from a national queue at their stores, be a virtual expert through the retailer's app, or take on a tech-oriented supply chain role that can be done remotely, Barry said.
The chief executive did not elaborate on how more part-time workers would specifically allow for more flexibility across these roles as compared to full-time workers. Asked by an analyst about the optimal mix of full-time to part-time staff, Barry said: "[O]ptimal, I don't think we know yet, given that we're still in the midst of a pandemic, we still have a lot of unknowns in front of us. But we do feel pretty strongly that we are now set up in a better position to be able to flex with the changing customer dynamic."
The changes come as Best Buy's digital and omnichannel sales surge amid the pandemic. The retailer's domestic online comparable sales increased by a whopping 144.4% in the fiscal year that covered 2020, compared to 17% the year before. U.S. online comp sales were up more than 89% in the fourth quarter. Barry said in a press release that stores fulfilled almost two-thirds of online revenue via in-store and curbside pickup, and ship-from-store.
Amid robust growth in its top and bottom lines, Best Buy plans at least $2 billion in share purchases during the fiscal year and a 27% dividend increase for stockholders, after paying out $568 million in dividends and repurchasing $312 million in shares over the previous year.
As Best Buy's digital sales grow, it is testing new uses of its space, including piloting reductions in sales floor and alternative layouts. Barry said that in a subset of stores the retailer plans to reduce square footage for sales floors and install "warehouse grade packaging station equipment and supplies."
Neil Saunders, managing director with GlobalData, noted that these kinds of shifts reduce the number SKUs on the the sales floor, leaving the most popular items. "In our view this is a sensible pivot because it recognizes that collection from store is a trend that is here to stay while, at the same time, understanding that a physical location is still vital for those who wish to browse, talk to associates, or experience products in person," Saunders said.
