Brick and mortar retail has really taken a hit this week. First, all Fry’s Electronics stores ceased operations practically overnight, and now, Best Buy announced that it has laid off 5,000 workers this month with plans to close more stores as the year progresses.
Best Buy has actually experienced exponential growth during the COVID-19 pandemic, but unfortunately for store workers, a large portion of those sales were done online. Looking ahead, Best Buy expects that pattern to continue in 2021 with estimates pointing towards 40 percent of its sales to come from online purchases. That number is up 19 percent from two years ago and has forced Best Buy to take hard look at where and how to adjust their workforce to fit this new demand.
CEO Corrie Barry started with cutting back full-time employees. In fact, most of the 5,000 layoffs were full-time workers. In a call with analysts on Thurday, Barry said the adjustments came as a means of “having too many full-time and not enough part-time employees.” These cuts have now made way for 2,000 new part-time positions in stores.
Best Buy will reportedly be using its newfound in-store space for home delivery orders. The company is in the process of mapping out store layouts that will significantly reduce the size of the sales floors to pave way for shipping orders.
During the latest quarter ending on Jan. 30, Best Buy stores closed out with a 12.6 percent increase in sales over the same time last year. Under normal circumstances, this would be great news for Best Buy who, like most retailers faces growing competition with Amazon. But Best Buy expects demand will slow this year, and they are clearly preparing for when that day comes.