Bye Bye, Best Buy?
Gee, who could have predicted this? The Internet is creating entirely new industries, and decimating others. Big-box electronics retailer Best Buy is among the latest bricks and mortar companies to be decimated by the web.
Circuit City is long gone, and the corner Mom and Pop hi-fi and TV shop is a distant memory. Now Best Buy is feeling the pain. Most recently, amid a spate of bad news, the retailer announced that it will undertake a 1.4% reduction in the company's 167,000-person workforce – that's 2,400 lost store jobs. And that carnage is in addition to the layoffs associated with a cost-cutting plan that has closed 50 of its superstores this year with the hope of opening smaller stores.
The enemy, of course, is online competition. Consumers shop online or simply use retailers as showrooms; adding insult to injury, it's common to see a potential customer standing in a Best Buy consulting a smartphone to see how much cheaper they can buy it from Amazon (and that's likely to get worse if the online titan introduces same-day delivery as rumored). If that wasn't bad enough, it is all bread and circuses at retailing juggernaut Wal-Mart which is taking a huge chunk of the physical-store market. Either way, an electronics specialty retailer like Best Buy is hosed.
Best Buy tried to differentiate itself and justify its existence as being a trusted "expert" retailer of electronics. But as part of the layoffs, the kids in the elite Geek Squad, Best Buy's centurions of customer service, are suffering the elimination of 600 positions – fully 3% of the workforce. The company today announced a plan to hire more Geek Squad members later in the year as it reorients towards smaller stores, but that still leaves significant shrinkage. Perhaps even expertise isn't enough to convince people to pay extra, and maybe Best Buy - always "consumer oriented" - has determined that it must belt-tighten and simply compete on price. Any way you slice it, this kind of decimation is not pretty, and probably not good for anyone who buys electronics.
Parenthetically, the word "decimation" has an interesting etymology. It was a form of harsh discipline practiced by the Roman army. If troops performed poorly, they were lined up, and every tenth man was singled out, to be mercilessly bludgeoned or killed by the other nine. As one might expect, this tended to encourage strong job performance among the troops.
Anyway, it's kind of sad to see all those kids in blue polo shirts lined up in the parking lot, but hey, what are you going to do? Res ad triarios venit.