Is Best Buy Turning into a Bad Buy…Again?

With the news last week that Best Buy, the big consumer electronics retail chain, plans to lay off – OK, fire – hundreds of store workers as it continues to close stores it has to make you think, haven’t we seen this one before?

And just as importantly, have they learned nothing from the past few years?

Best Buy’s remarkable – and let’s face it, highly unlikely –turnaround several years ago under CEO Hubert Joly is the stuff of Harvard Business School case studies. Focusing on treating its employees well, listening to them on what the chain needed and using them as the front line against online incursions on its business by emphasizing customer service and knowledgeable in-store selling, Best Buy’s resurgence was just downright brilliant. While other national specialty chains like Bed Bath & Beyond, Gap and Party City were on their way to collapse because they didn’t understand what it took to compete with Amazon and discounters, Best Buy showed it was possible.

But under Joly’s successor Corie Barry all of that seems to have been largely forgotten. We get that she is closing some stores, particularly bigger ones that are oversized for the way in-store shopping is done these days. And so, that explains much of the 20% reduction in headcount the chain has seen over the past three years.

But getting rid of the in-store workers who really know what all those knobs and buttons do seems to be exactly the wrong way to compete with online sellers. Best Buy showed that physical retail can succeed when you have the right people working in your stores.

Many years ago, its main competitor at the time, Circuit City, decided to do something similar and get rid of its bestmsalespeople who really knew about consumer electronics…and subsequently were paid the most amount of money. They were replaced by lower-paid part-timers. Not all that long afterwards the entire chain went out of business and you had to point to this personnel strategy as a big reason why.

If Best Buy stakes its future on e-commerce it could go the same way. Its stores – and the good salespeople within them – are what sets the retailer apart from both online sellers and discounters like Walmart and Target. Yes Best Buy needs to up its online game but it has also increasingly turned to providing service through its Geek Squad unit and also in health care. Those are good initiatives, but they need to be part of an integrated effort where in-store customer interface is the primary directive.

Without them, it is just a big box full of stuff where the customer will make their purchasing decision based purely on price. And that just doesn’t work.

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