Best Buy Closing 50 Stores in Attempt to ‘Think Small’
By Jared Newman
In an effort to stay competitive with Amazon, the Apple Store, and other online retailers, Best Buy is slimming down.
The big box retailer announced that it will be closing 50 of its retail locations in the United States during the coming fiscal year. Meanwhile, it plans to open 100 smaller mobile stores, with a focus on phones, tablets, and e-readers.
According to the Associated Press, Best Buy currently operates 1,450 stores in the United States, so 50 locations closing won’t create a huge dent in the retailer’s presence. It is, however, an admission by Best Buy that it can’t continue to operate as it’s been operating.
The moves were described as “major actions to improve our operating performance” by Best Buy CEO Brian Dunn in a press release.
Best Buy isn’t just closing stores–it’s also changing the way that employees are trained and compensated. According to the Wall Street Journal, Best Buy plans to increase worker training by 40 percent and offer financial incentives to employees who meet “customer service and business goals.”
What this means for customers isn’t clear yet. Best Buy employees don’t work on commission, and the company did not use that term in its press release to describe its new compensation plans. However, Best Buy already offers incentives to employees in its mobile stores, and has reported an increase in phone sales. Hopefully the incentives in regular Best Buy stores will actually amount to better customer service (as opposed to more aggressive upselling).
Members of Best Buy’s Reward Zone Silver loyalty program will see a few tangible benefits. Best Buy says it will start offering free expedited shipping to these customers–a nod, perhaps, to Amazon Prime–a free Geek Squad house call, a 60-day return window and price match policy, and early access to some popular products. These loyalty club members account for “a significant percentage” of Best Buy’s profits.
I doubt anyone’s surprised by Best Buy’s change of course. Brick-and-mortar stores now run the risk of being showrooms for online retailers, who often sell at low prices and without sales taxes in many states. Also, with Apple products on the rise, Best Buy is competing with the simplicity and convenience of the Apple Store. Focusing on fewer products and a more knowledgeable staff is an easy way to compete on both fronts.
But as Forbes pointed out in a recent skewering of Best Buy, the store’s affliction may be much more basic. Last year, Best Buy failed to ship some orders in time for Christmas because it couldn’t meet demand, and only began notifying customers a couple days before the holiday.
It also seems like everyone has their own Best Buy horror story–whether it’s a problem with picking up online orders in-store, product returns gone wrong, or unwelcome, nagging sales pitches from clerks. Above all, Best Buy needs to eliminate customer headaches. Such a goal might not be sexy enough for a press release, but hopefully it’s one that Best Buy isn’t neglecting.