I agree wholeheartedly about customer service reducing shrink. One of the issues I used to battle was the sharp pencil finance guys who would quickly adjust the payroll budgets down to compensate for a bad inventory, especially if it was a mid-year count. I don't know how many times I said the phrase "self fulfilling prophecy." The finance guys want to reset the P&L and offset losses, instead of recognizing that you can quickly establish a percentage of how much shrink will go up when payroll goes down. It never pencils out yet they will still try to cut payroll anyway.veteran+ wrote: ↑November 26th, 2023, 8:48 amThank you for clarifying.ClownLoach wrote: ↑November 25th, 2023, 12:23 pmWell, except for the fact that they changed their entire strategy and format. They had moved to a zero lock up program years ago, every laptop computer box, camera, etc. was customer accessible. They put all the cages back, lockups back, and put backroom storage back. Now they're remodeling stores and expanding the backrooms even further so they take up a quarter to a third of the building and adding pickup counters as they recreate the late, famous electronics industry leader in shrink, Circuit City who secured everything and fired managers for getting over 0.40% shrink (I am dead serious). I should mention that the backroom model is actually a labor savings too, less planograms to set, less labor to stock sales floors. Just a handful of people unload the trucks and put all the boxes into their pallet racking where they're not touched again until they're sold. No need for daily restocking of the sales floor and recovery processes and such. Usually just one person in the warehouse, and if they need help loading a big box they page an available floor worker to help.veteran+ wrote: ↑November 25th, 2023, 8:00 am https://finance.yahoo.com/news/best-buy ... WeWjVKSdQB
Exactly!
So maybe Best Buy had the foresight to predict the shrink problems today and secure themselves against it? Because there is absolutely no resemblance between what Best Buy looked like in the early and mid 2010s versus today from a security perspective. They've locked down the stores like a bank vault and just keep adding security.
And they've already closed 15% of the chain, nearly all of the closures being in higher shrink areas.
The reason they added workers is because they slashed so many last year and this year that they were losing sales to Amazon and Costco because they were so bare bones that they had a wait for hours to just get a cashier to ring up a TV that's in the back room. So they forced the customer to buy online which usually translated to no sales of the high profit cables, warranties, mounts, installation services, etc. that are the only thing that keeps the store open since the margins on the electronics themselves are less than 5% while the add ons are 90% profit.
They didn't add staff to prevent shrink. They are also finishing the process of fully outsourcing their entire delivery department as well as Geek Squad service and installation businesses to 3rd parties. So basically they've slashed staffing more than ever this year.
They are so reckless and incompetent at the C-suite that they have executed the same layoff programs of all their best salespeople three times in the last decade. Circuit City did it once and they are still in business school textbooks over it. Best Buy keeps repeating the same staffing and business model mistakes, expecting a different result every time.
They need to offer Hubert Joly a "blank check" to return and save the company, again. Unlike Howard Schultz and Starbucks, Joly's services are so desperately needed to right the ship that I could see the liquidation of this $50 billion a year company occurring in the next 5 to 10 years. They have an overreactive C-suite that makes massive scale changes to every aspect of the business model every few months or years in an effort to portray their worth to Wall Street who unfortunately doesn't have any other national competitor to compare them to. Massive, expensive and costly changes do not work in a low margin business dependent on offsetting loss leaders with high profit add-ons.
Really misleading article.
I was most interested in the more "customer service reducing shrink" narrative which I very much believe in.
I am just very cynical of Best Buy and their suspect operations. They must have had friends in the media that they paid to write the absolute worst stories about Circuit City, Comp USA and others, but they are hands down the worst operator the electronics industry has ever seen. That's why I love to call them out on their BS. Make no mistake about it, they still have far less customer service staffing than a year ago and they laid off all of their best/most experienced/full time sales people earlier this year. Where have we heard that before? The CEO and C-suite should be fired for the incredible disposal of costly training and development. They were the last company that still was spending on good training for their key people and they would milk their vendors for product training meetings and such at their expense, only to turn around and dismiss all the recipients of the training. So there's probably several hundred million dollars of training in just the last few years that has been disposed of, along with the average store losing literally several centuries of knowledge and experience.
They've done nothing to increase customer service, quite the opposite since Joly left. The shrink reduction narrative at Best Buy as explained is a complete farce as it has been accomplished entirely through physical security cages, glass cases, and reestablishing stock rooms and pickup counters. Even the video games are color copies of the box in cases and all the actual product is behind the registers now in locked cabinets. They're just sniffing around for positive PR when they've employed all the least desirable solutions from a customer perspective.