Dive Brief:
- Best Buy cut hundreds of jobs last week in its stores as the electronics retailer anticipates declining demand from its customers, according to The Wall Street Journal and other media outlets.
- According to the Journal, which cited anonymous sources, the positions cut include workers who help with purchasing or planning home-entertainment systems.
- Best Buy did not immediately respond to a request for comment.
Dive Insight:
Best Buy was among those retailers able to capitalize on the pandemic, as consumers outfitted and upgraded their homes and home offices with new technologies, with help from government stimulus that has since run dry.
Some of those customers’ purchases, such as televisions and computers, likely won’t need repeating anytime soon. And in the meantime, inflation in essentials like food and gasoline has led many consumers to pare back spending on discretionary and big-ticket items. According to Adobe’s Digital Price Index, online prices for electronics fell 9.3% year over year and 2% month to month in July — a sign of weakening demand.
In a better market, as the retailer’s sales and profits boomed starting in 2020, Best Buy still excised thousands of full-time jobs, as executives anticipated more digital shopping and sought to reduce the proportion of full-timers to part-timers on its rosters.
Some employees told Retail Dive last year that the cuts exacerbated difficulties in their jobs, making it harder to assist customers for example. Adding more tasks to store roles also made it more difficult to serve customers and build up deep knowledge in a product category, sources also said last summer.
The latest cuts come after Best Buy revised down its guidance for the second quarter. The retailer now expects Q2 comp sales to fall about 13%. CEO Corie Barry said at the time, “As high inflation has continued and consumer sentiment has deteriorated, customer demand within the consumer electronics industry has softened even further, leading to Q2 financial results below the expectations we shared in May.”
After last year, when comps grew a record 10.4% on top of 9.7% growth the previous year, it was likely inevitable Best Buy would face declines this year. It started the year forecasting a decline of 1% to 4%, but the retailer’s Q1 and projected Q2 have already significantly outpaced that.
“Electricals, which is Best Buy’s area of focus, has been particularly hard hit as it requires not only cash but confidence to buy many of the big-ticket items,” Neal Saunders, managing director with GlobalData, said in emailed comments. “Against this backdrop of declining sales, Best Buy needs to retool its operations so that it is not overstaffed and pressuring its bottom line.”
Best Buy’s store-level cuts follow a year when many retailers complained of a labor shortage across the U.S. Barry, after the company let go of 5,000 employees in 2021, joined the chorus of retail executives discussing how hard it was to find good help.
This year, Walmart has laid off some corporate staff, while several e-commerce specialists — including Warby Parker, Shopify, Glossier and Stitch Fix — have laid off workers as well.
