Best Buy has laid off 5,000 workers this month and is planning to close more stores this year as more consumers buy electronics online, according to a report from CNN Business. The news comes on the heels of Fry’s Electronics shutting its doors on all 31 stores on February 24, 2021, but it seems the layoffs were not totally unanticipated.
Best Buy (BBY) expects 40% of its sales to come from online purchases this year, up from 19% two years ago, and the company said it needed to alter its workforce in response to this shift. Best Buy CEO Corie Barry told analysts on February 25, that starting earlier this month, Best Buy had been adjusting the mix of full-time and part-time employees in stores, due to “having too many full-time and not enough part-time employees.” As a result of this reorganization, Best Buy laid off 5,000 employees, the majority of whom worked full-time. It also said it is adding approximately 2,000 new part-time positions. Best Buy currently has around 102,000 employees.
While Best Buy has come out on top during the global pandemic, it is expecting a slow down to the demand of appliances, laptops, TVs and other home electronics in the near future. Responding to changes in the retail industry, Best Buy closed 20 of its brick and mortar stores over the past two years, and, according to reports, expects to close a larger number in 2021. Additionally, “there will be higher thresholds on renewing leases as we evaluate the role each store plays,” said Barry of the 450 store leases up for renewal through the next three years.
On the positive side, Best Buy has been experimenting with a modified store layout that utilizes a smaller sales floor, giving more space to delivering the rising number of shipping orders.
Is this news yet another nail in the retail coffin? No, it is not. Retail is alive and well, just not in the same form that we have been used to over the past decades. In their annual forecast, the National Retail Federation reported it is anticipating that overall retail sales will grow between 6.5 percent and 8.2 percent to more than $4.33 trillion in 2021 as more individuals get vaccinated and the economy reopens. Additionally, NRF forecasts that 2021 online sales, which are included in the total, are expected to grow between 18 percent and 23 percent to between $1.14 trillion and $1.19 trillion.
It’s not that people aren’t shopping, its how they are shopping that is changing.
While Fry’s struggled to meet the changing retail landscape and ultimately closed its doors for good, Best Buy has shown it is ready to make hard decisions and press forward to deliver to their customers and I think it will pay off for Best Buy and its customers – even though the reduction in staff is heartbreaking. It will be interesting to see the evolution of Best Buy’s order fulfillment strategy in the coming months.
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