Best Buy Revamps Store Operations
By Alan Wolf -- TWICE, 4/20/2009
MINNEAPOLIS — Best Buy has restructured its store operations in an effort to cut costs and put more supervisory personnel on the sales floor.
The reorganization, which is effective immediately, will result in a headcount reduction and pay cuts.
Best Buy spokesperson Susan Busch said the move was the next step in a company-wide restructuring that began with the voluntary separation of 500 corporate workers in February and the loss of 250 headquarters jobs in March.
“The world around us has changed,” Busch said. “The global financial environment is unlike anything we have ever seen. We believe we have done a good job of meeting our customers needs so far, but have to continue to evolve and change today to continue to do so tomorrow.”
To that end, Best Buy’s new store operating model “places greater emphasis on customer-facing employees and provides more focus and clarity to the leadership roles in the store,” she said. The changes support the company’s enhanced focus on store-level initiatives and local marketing to meet the needs of customers and communities, as expounded by incoming CEO Brian Dunn during an earnings conference call last month. Dunn also stressed the need for continued cost reductions amid the economic downturn.
This could mean the demotion of as many as 8,000 senior sales associates and the dismissal of upwards of 1,000 assistant store managers, according to a research note from Sanford Bernstein analyst Colin McGranahan, which was cited in the Wall Street Journal last week.
Busch said the numbers were high and wouldn’t provide specifics of the reorganization, which was announced to workers on April 11, but acknowledged that it affects every store employee. The company tried to limit the number of job cuts, she said, and downsized employees will be given the opportunity to apply for other positions at the stores.
Best Buy also plans to open 45 U.S. stores this year, including eight this quarter, which will create thousands of new jobs, Busch said.
Reports by the Journal, the Minneapolis Star Tribune and other outlets drew comparisons between the reorganization and Circuit City’s controversial decision to dismiss 3,400 seasoned sales associates in 2007 and replace them with lower-paid hires. Terminated workers were similarly given the opportunity to reapply for the lower-paying positions, and the resulting disruption and diminished moral is believed to have hastened Circuit City’s demise.
Best Buy adamantly dismissed the comparisons. “For the record, we are not going down the same path as Circuit City,” Busch said. “We’ve been talking about our actions to make the store experience better for our customers for some time now.”
McGranahan of Sanford Bernstein agreed. In his research note, he acknowledged that while the aim was the same for both CE chains — to reduce wages — the comparison ends there. Best Buy’s approach is less severe than Circuit City’s, he noted, and the company’s performance-oriented culture and its employees’ fondness for CEO-elect Dunn, a former store clerk himself, would limit the risk of disruptions.
-
B&M CE is dead....the internet, Costco and Walmart have won the battle. Best Buy is only giving their remaining customers what they're asking for - bottom of the barrel prices with little and eventually no customer service as CE customers have obviously spoken loud and clear that they could care less about the service that is provided.
A public company's first loyalties are always to the company no matter what the corporate suits tell anyone. The company could care less if you quit or if you stay and do the same job for half the money. The people running the company really only have one consideration and that is to show a profit so the stock price stays high. These rules of engagement are not unique to the CE world but it is where the most pain and suffering has occurred over the past year or two.
Long time Best Buy employees would be wise to start planning their exit strategy now. The carnage that your company has scheduled for you has already been put in place at Circuit City and Tweeter among other places and in all cases it did not end well for the employees. Best Buy will be no different and to think otherwise would be silly.
sarah connor - 2009-28-4 08:28:00 EDT -
It's amazing to me that hardly anyone has posted a response to this action. It seems that brick and mortar retail in CE is dying a very quick death. First Tweeter and Circuit last year. Now this. Is there an end in site. In the near future, will brick and mortar CE stores go the way of brick and mortar CD stores? One has to wonder. And so little response from these readers.
stillinshock - 2009-27-4 15:08:00 EDT -
I would love to know how demoting your top level employees, and
reducing their reducing their pay will enhance the customer
experience. Best Buy is executing a form of extortion against their
employees. Employees are given a choice, separate from the company
and receive 3.5 months salary (minimum) assuming a 38 hr work
week, or accept a demotion and reduction in pay, with quarterly gap
pay through fiscal year '10. Keep in mind that the gap pay is taxed as
if it were a bonus 40%+. Best Buy is seriously impacting the livelihood
of thousands of families. In this time of economic distress most
employees are scared into keeping their job and accepting the
demotion, for fear that they will not be able to find employment
elsewhere. What is a person to do in this situation? They are only left
with the option to feel helpless and beaten down, the employer that
encouraged you to take steps to get promoted is now going to penalize
you for it, and will continue to expect the same performance for, in
some cases as little as half the compensation.
If Best Buy continues with this operation model it is going to go the
way of Circuit City, and the quality of service will continue to decline.
Today you can still walk in to Best Buy and find knowledgeable staff at
the core of the employee pool. As employees who have a good talent
set are able to leave to new jobs, they will, no one can live on what they
are going to pay these people. This will leave the talent pool at Best
Buy noticeably empty, and like Circuit City, CompUSA, and Radio Shack
you will discover that there is no difference between these stores and
Walmart, Sam's Club or Costco. It's just a sad state of affairs for
everyone.
GLH - 2009-26-4 04:12:00 EDT
No related content found.
VIEW ALL GALLERIES