Best Buy shrinks sales floors for a more fulfilling experience

Discussion
Photo: Best Buy
Dec 03, 2020

Best Buy has experienced such a great demand for in-store pickup and ship-from-store that it is re-architecting some store locations to facilitate these services — at the expense of the sales floor.

The electronics chain is shrinking its sales floor in four locations in Minneapolis from 27,000-square-feet to 15,000-square-feet in order to make more space for the staging and fulfillment of the newly popular services, said Best Buy CEO Corie Barry on the retailer’s third quarter earnings call. The pilot locations will also allocate more backroom space for products that move online but don’t necessarily sell well in brick-and-mortar locations, while focusing on keeping only popular, fast-moving SKUs on the sales floor.

Best Buy is planning to use different layouts in a few of the pilot locations to test how various aspects of its services work in conjunction with one another. One store, for instance, will have a larger space for the Geek Squad and another will have a warehouse adjacent to its curbside pickup area and lockers.

The reduction of sales floor space in these locations comes at a time when in-store browsing is down significantly due to the novel coronavirus pandemic.

Best Buy has emerged as a success story during the pandemic, reporting 23 percent same-store growth and 174 percent online growth in its third quarter in late November, according to its latest earnings report.

The chain has been able to capitalize on numerous factors in recent quarters, including an unforeseen boom in electronic gadget sales thanks to the new work-from-home and teach-from-home needs of an unprecedented number of people.

Best Buy has also been finding new ways to efficiently fulfill digital sales.

In August, after posting record numbers in its second quarter, management said that it was continuing to experiment with new ways to support fulfillment of online orders. The chain announced the optimization of 250 store locations specifically to better handle ship-from-store orders. Although all Best Buy locations are set up for ship-from-store, specific ones were chosen to help streamline the overall process based on available space, proximity to carriers and ability to support same- and next-day deliveries.

DISCUSSION QUESTIONS: Do you see the reconfiguring of selling space to facilitate pickup and ship-from-store as being a good move for Best Buy? Will store configurations like this outlast the pandemic and will they become common across much of retail?

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Braintrust
"Reconfiguring store layouts to optimize for the new way consumers want to buy is thoughtful and proactive."
"Better understanding of the shopper allows leaders like Best Buy to create a better, more precise shopping experience."
"It’s another example of Best Buy being reactive and proactive to shifts in the consumer journey."

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24 Comments on "Best Buy shrinks sales floors for a more fulfilling experience"


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Mark Ryski
BrainTrust

Smart thinking both for the short and long term. There’s no doubt that the pandemic will change some consumer patterns permanently. I believe that ship-from-store will be one these. Reconfiguring store layouts to optimize for the new way consumers want to buy is thoughtful and proactive.

Neil Saunders
BrainTrust

Best Buy’s collection areas are bursting at the seams and back end store operations need more space, all thanks to the dramatic rise of omnichannel. At the same time, while people are still coming to the store, foot traffic growth is more muted and people are more selective in what they’re looking at. Put the two things together and it makes perfect sense to rethink the store model.

Steve Montgomery
BrainTrust

The answer to the two questions lies in whether the changes in shopper behavior are permanent or whether shoppers will revert to their former shopping pattern once the pandemic passes. Once people feel safe shopping in stores again, I think many will want to get out of the house again for retail therapy. This includes wanting to see a broad selection of items even though many may be slower movers. That being said there is no question it is likely that many people will still want the convenience of orders shipped to their homes.

Bethany Allee
Guest

It takes 21 days to break a habit. Consumer behaviors have been altered for nine months, and we’ve got a while to go before shopping habits can (if they ever will) return to what they were pre-pandemic.

This move demonstrates that Best Buy is mid-to-long-term turning one of their biggest risks (an expensive large-scale footprint) into a competitive advantage and asset. Smart move. Kudos to them.

Shep Hyken
BrainTrust

This is an example of a major retailer showing flexibility. Will the new configuration outlast the pandemic? Nothing lasts forever. If it doesn’t change soon, it will change later.

Ryan Grogman
BrainTrust

The shift in Best Buy store layouts six or seven years ago to account for the rise in showrooming made sense at the time, and the planned shift to account for the rise in omni-orders makes a lot of sense at this time as well. It’s another example of Best Buy being reactive and proactive to shifts in the consumer journey. Even if shopper behavior heads back to pre-pandemic tendencies, Best Buy seems well positioned to have the flexibility to optimize for whatever the trends are happening at the time. More than likely, the need for more store fulfillment and pickups will remain for the foreseeable future.

Jeff Sward
BrainTrust

Sounds like a perfect example of evolution in process. The retailer is listening hard to the customer and responding. That’s what retailers do — right? Right? I watched about two years ago as a Nordstrom store converted a mall entrance shoe department to a BOPIS and customer service department. Imagine, Nordstrom converting a mall entrance shoe department. That’s how important they viewed responding to new customer habits to be. Sounds like Best Buy is living very much in the hearts and minds of their customers. Bravo.

Gene Detroyer
BrainTrust

Do I detect a big tongue-in-cheek here? “That’s what retailers do — right? Right?”

Jeff Sward
BrainTrust

Busted. Shows the contrast between how much some retailers have been willing and prepared to change and evolve versus other that seem to be hostage to a bygone era.

Peter Charness
BrainTrust

Even before the pandemic it was becoming obvious that retailers were seeing more showrooming, needed to be more agile with their inventory, and be able to quickly and cost effectively fill customer demand from the lowest cost, logical ship/pickup point. For most this means leveraging store inventory as part of online order fulfillment. So reconfiguring stores to make curbside/ship-from-store/pick up in-store/reserve in-store lower cost and more effective is a must. If I can see it, touch it, and try it on in-store, whether the item I actually take home (have delivered to my home) comes off the floor, or out of a back room or fulfillment center, really doesn’t matter to me as long as it’s quick. Who remembers the catalog store model (Paula was it Luria?)?

Scott Norris
Guest

LaBelle’s here in Minneapolis/St. Paul in the 1970s….

George Anderson
Staff

Service Merchandise was the chain here as I recall.

Gary Sankary
BrainTrust

Best Buy has been moving in this direction for a while, the pandemic has really just accelerated that move. Customers have changed their buying habits, and I happen to believe that curbside pickup will be one of those services that will experience high demand even after we are on the other side of this.
Best Buy was quick to realize this, and were early to transition their operations to support digital commerce. And given the results they reported, results have been spectacular.

Bob Amster
BrainTrust

Reallocating space to accommodate the changes in the retail panorama is smart for any retailer that wants to take advantage of pickup and ship-from store.

David Mascitto
BrainTrust

In the commoditized world of consumer electronics, competitive pricing and convenience are key drivers in the purchasing decision. So it makes perfect sense for Best Buy to pursue a micro-fulfillment strategy and somewhat surprising they haven’t done so sooner to compete against DTCs with same-day shipping options. But what works for consumer electronics might not work for luxury or apparel, where a delicate balance must be struck between micro-fulfillment efficiency and the in-store experience.

Camille P. Schuster, PhD.
BrainTrust

With the decrease of in-store browsing, the increased demand for local pickup, and the pressure for last mile fulfillment, the reconfiguration of stores makes sense. The in-store space may be reconfigured again as customers return to in-store shopping. This move sets Best Buy up to allow for more innovation.

Richard Hernandez
BrainTrust
Richard Hernandez
Director, Main Street Markets
9 months 21 days ago

This makes sense. A lot of stores have been doing curbside and ship-from-store without reconfiguring their space to efficiently execute both of them. Realizing this is long term, now is the right time to reconfigure the space.

Dave Bruno
BrainTrust

Agility is the new black in retail ops, and this shift by Best Buy is a perfect example of a retailer effectively and rapidly adapting to shifting market conditions. Thanks to their ability to adapt, the question of outlasting the pandemic is rendered somewhat moot: as conditions change, Best Buy will change, as they have done remarkably well lately.

Dave Wendland
BrainTrust

Bravo, Best Buy! Pivoting to improve ship-from-store agility is paramount in today’s environment and I believe it will live on if and when the pandemic is in the rearview mirror. Reconfiguring space for optimal — and spaced — shopping for those entering the store needs to be considered; while, at the same time, segregating the fulfillment section for improved and efficient workflow must be addressed. Others need to take a look at how Best Buy is achieving this dichotomous existence.

Rich Kizer
BrainTrust

It is a good idea? No — it is a necessary idea. However, shrinking the in-store lineal footages of product presentations is a little scary. It may leave in-store customers singing “The Thrill is Gone.” However, I am sure that immediately after the rush, the stores will re-blossom product presentations and once again will thrill their customers.

Natalie Walkley
BrainTrust

This is a smart move for Best Buy, and other retailers for that matter. Given that DCs are often in rural areas, and around 80 percent of the U.S. population lives near cities, it is a smart way to have ship-ready inventory closer to buyers (decreasing ship time and final-mile costs). The key is making sure they have a good idea of what SKUs they still need in stores for foot traffic, and what products are more likely to ship from store. That, combined with a strong fulfillment network and robust technology, will support their continued success.

Ken Morris
BrainTrust

I believe that reconfiguring to accommodate pickup and ship-from-store is a move that Best Buy had to make. The increased velocity of BOPIS and BOPAC sales will not go away. We have taken three to five years out of the online adoption curve and that genie is not going back in the bottle for this segment of retail. This pandemic will have a similar effect as the Great Depression had on our grandparents and great grandparents. They hoarded product, saved tin foil, canned vegetables, etc. for a lifetime and their behavior had a similar effect on their children and so to will our current COVID-19 crisis.

David Adelman
Guest

Best Buy has amazing intuition. Just as they saw the writing on the wall for BOPIS and Curbside Pickups, they also recognize the growing demand for the increase in local distribution required to satisfy the surge in online sales. We all know the 80/20 rule well. It works. By reducing the store footprint and increasing local distribution and warehousing, Best Buy once again becomes a proactive retailer leader!

Larry Negrich
Guest

Best Buy reacted quickly and adjusted well to the pandemic. Shrinking stores to improve the customer experience is something all retailers should be doing perpetually. No shopper wants to wander through commodities to get to the item of focus. Better understanding of the shopper allows leaders like Best Buy to create a better, more precise shopping experience.

wpDiscuz
Braintrust
"Reconfiguring store layouts to optimize for the new way consumers want to buy is thoughtful and proactive."
"Better understanding of the shopper allows leaders like Best Buy to create a better, more precise shopping experience."
"It’s another example of Best Buy being reactive and proactive to shifts in the consumer journey."

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