How Best Buy is Remodelling its Stores to Support eCommerce
With stores closed last year or under capacity restrictions due to COVID-19 eCommerce sales in the United States surged, up 32.4%. Best Buy is one of many retailers that rode a wave of eCommerce transactions with its online sales up 89% in the fourth quarter of 2020.
Best Buy expects that approximately 40% of its sales will come from eCommerce in 2021 up from 19% in 2019. “And while some traffic will likely shift back to our store channel in fiscal 2022, like many retailers, we believe much of what we saw last year will be permanent,” says Corie Barry, Best Buy’s CEO.
While eCommerce is surging the role of Best Buy’s stores are only increasing in importance. “We are building all of our experiences around meeting these needs as we move from being a big box retailer with a strong omnichannel presence to an omnichannel retailer with a large store footprint for support and fulfillment,” says Barry. “Fundamentally, when you're looking for help and want to be inspired, the best experience will always be in our stores, talking to one of our amazing employees.”
To support the shift to more eCommerce, last November Best Buy set up a pilot to test a new store model. In the pilot four stores were remodeled to reduce selling square footage from an average of 27,000 sq. ft.to 15,000 sq. ft. With less selling space employees have more space to fulfill online orders including picking and packing merchandise as well as providing more space for customers to pick up online orders. “With that big of a digital shift happening in that short of a period of time, we’ve been doing everything we can to adjust to the new reality,” says Barry. The pilot has already expanded into additional markets.
Best Buy also laid off 5,000 employees last month to make room for more flexible part time employees to support its online business. “As we have said before, customer shopping behavior will be permanently changed in a way that is even more digital,” said a Best Buy spokesman. “Our workforce will need to evolve to meet the evolving needs of customers while providing more flexible opportunities for our people.”
Ultimately customer preferences for omni-channel retail is driving the changes at Best Buy. “Our stores played a pivotal role in the fulfillment of these sales as almost two-thirds of our online revenue was either picked up in-store or curbside, shipped from a store or delivered by a store employee. The percent of online sales picked up by customers at our stores was 48%, representing a 90% increase in volume,” said Barry on Best Buy’s fourth quarter 2020 earnings call.
In line with this shift in direction Best Buy plans to close more than 20 large store format stores in 2021.
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