updated 02:20 am EDT, Fri July 6, 2012
Less stock, more emphasis on employee-provided solutions
In an effort to stave off the effects of a stagnant economy and bad business decisions, electronics retailer Best Buy is converting some of its stores' sales floors to resemble the interior of Apple retail establishments. Best Buy said its slimmer store is focused less on display of inventory, and more on connecting customers with employees who can knowledgeably assist in purchasing, or who can help the consumer with a technical issue.
Other focus shifts include fewer large-screen televisions, a reduction in the DVD and CD aisles, and an increase on tablets, e-readers, and mobile phones, emphasizing Best Buy's existing strengths in marketshare over its competitors. The alterations in strategyis an attempt to to lure in customers, reversing a downward trend of store visits. Shoppers today visit Best Buy twice a year on average, rather than 10 times a year as they did a decade ago.
Additionally, the company hopes improved service will help its bottom line. Best Buy recently announced that 40 percent of the current workforce will undergo intensive training starting in the fall. New hires will receive a mandatory 80 hours of training. Speaking about the costs of the training and the store renovations, Mike Vitelli, president of US operations said doesn't see the expenses as costs, "but investments that will lead to higher sales in less square footage."
Interim Best Buy CEO Mike Mikan referred to the experimental store as "Best Buy 2.0." He added that he viewed the new format as "just a first step in dealing with long-standing problems. This is catch-up, if you will, but there's much more to come." Initially, only 60 of Best Buy's remaining 1,050 US retail stores will be converted to the new format.
Profits fell 25 percent in Best Buy's first quarter, with revenues up two percent to $11.6 billion dollars. Best Buy blames the lower profits on the practice of "showrooming," or going into the store to shop, then purchasing online from a different vendor. [via Wall Street Journal]