Best Buy lays off hundreds of store employees as shopping trends shift

• Best Buy is laying off hundreds of store workers as more of its shoppers buy online and sales of consumer electronics weaken.
• Retailers, including Best Buy, have struck a cautious tone as shoppers pull back in some categories like consumer electronics.
• Best Buy said in a statement it is “evolving our stores and the experiences we offer to better reflect the changes in customer shopping behavior.”

Best Buy said Friday that it is laying off hundreds of store workers across the country as more of its shoppers buy online and sales of consumer electronics weaken.

A spokesperson for the company confirmed the layoffs, but declined to share the specific number. The news was first reported by The Wall Street Journal.

The retailer framed the job cuts as a shift in its priorities, saying Best Buy plans to add thousands of customer-facing employees and invest in growing areas, such as its Totaltech membership program and its health business.

As of the end of January, Best Buy had more than 90,000 employees in the U.S. and Canada. That’s a drop from the nearly 125,000 workers that it had in early 2020, according to company financial filings.

The jobs market in the U.S. remains strong and labor market continues to be tight. The unemployment rate was 3.5% as more people got back to work after the Covid pandemic, according to the recent jobs report from the Labor Department.

Yet retailers, including Best Buy, have struck a cautious tone as shoppers pull back in some categories like consumer electronics. Retailers have seen softer sales of discretionary merchandise as consumers pay more for necessities because of inflation and spend more on services again, such as booking flights or dining at restaurants.

Best Buy is also following a period when many of its customers sprang for new laptops, kitchen appliances and home theater systems during the early years of the pandemic. Much of what it sells are big-ticket items that people don’t replace frequently.

Digital sales have become a more meaningful part of its business, too. About a third of Best Buy’s U.S. sales came from its online business in the fiscal year that ended in late January compared to 19% in the fiscal year that ended in late January 2020, the company’s CEO Corie Barry shared on its fourth-quarter earnings call. Sales made by phone, through chat or virtually have also grown, she said.

Still, Best Buy’s roughly 900 stores in the U.S. remain an important part of shift: Barry said more than 40% of online sales are picked up in stores.

Source: CNBC