Best Buy, the massive consumer electronics retailer, is not giving up on retail sales. However, it has begun a move to abandon the channel. According to The Wall Street Journal, e-commerce sales in particular have moved Best Buy to cut store based jobs.
The problem driven by retailers who cut store jobs is that it begins a flat spin. People who visit stores find customer service is poorer. They go elsewhere. Store sales worsen because people find this store experience troubling. More store based workers have to be fired to maintain margins.
Best Buy has been trapped in the Amazon vise for decades and that has not changed. Amazon, the largest e-commerce retailer by far, boasts consumer electronics as one of its best selling set of products. Best Buy’s online presence may have grown, but it will be permanently crushed by Amazon’s.
Best Buy’s store sales story is ugly. Recently, its management said that same store sales would drop 13% in its current fiscal year. Corie Barry, Best Buy CEO said: “While our financial results are not where we expected them to be this year, our sales continue to be higher than they were pre-pandemic.” The statement does not mean anything to anyone, particularly investors.
In the last year, Best Buy’s stock is off 32%. That is about the same as big retailer train wreck Target. At the very least, if Best Buy’s prospects were reasonable, it would have done a bit better.
Very few big box retailers are expected to reverse their fortunes – ever. One final test of whether Best Buy can prove it is on a short list of potential winners is the upcoming holiday season. If its results are poor, store personnel cuts are not nearly over.
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