Prices at big retail chains across the country are being squeezed — and so are headcounts.
A crowded marketplace and a more fickle Canadian consumer are resulting in a painful bloodletting in the form of widespread layoffs at some major retailers.
This month alone, more than 3,200 have been handed pink slips, two-thirds of them at beleaguered Sears Canada.
On Thursday, Best Buy Canada announced it was laying off 950 management and sales staff.
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Coming off a lacklustre holiday shopping season, the electronics retailer is trying to beat online competitors at their own game: giving shoppers the absolute lowest price possible.
“We’ll beat any price. Online or anywhere else,” a banner slogan informs visitors to Best Buy Canada’s website.
Ron Wilson, Best Buy Canada’s president since last year, said decisions like Thursday’s are “never easy.”
“We make them with our customers, employees and corporate values in mind,” he said in a statement.
Almost exactly a year ago to the day, Sears and Best Buy announced similarly sized staff cuts – 700 at Sears, 900 at Best Buy – as each braced for the arrival of U.S. discount chain Target. Best Buy also closed more than a dozen stores.
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A steady expansion by Wal-Mart Canada this year has also put pressure on the electronics retailer, expert say. And that’s adding to the inexorable encroachment of Amazon and other online competitors who are stealing a greater share of sales by the day.
Experts are skeptical that Best Buy can keep matching prices with its lower-cost rivals.
Instead, some say, the focus should be on providing unparalleled in-store shopping experiences.
“The opportunity in front of Best Buy is to create the ultimate electronics buying experience,” said Doug Stephens, principal analyst at Toronto-based Retail Prophet. “They need to change the way we shop for electronics and make being in the store a joy.
“It may mean fewer stores but they would be stores that could generate far greater gross sales and sales per square foot,” Stephens said.
Best Buy is trying. The so-called “store-within-a-store” concept is being rolled out to 176 of the chain’s 265 locations this year, establishing boutique-like shops for mega-brands like Samsung and Windows to wow and inform shoppers about their latest gadgets. And tech giants are paying Best Buy to host them in house.
The bigger focus long-term, however, may be on growing its online sales operations, which now boasts a catalogue of 80,000 items ranging from its core electronics to baby products.
“We have been focusing on simplifying our store structure and increasing inefficiencies to better align with the changing needs of our customers,” Wilson said in his statement.
Sales at stores open more than a year (a benchmark metric used to assess whether overall sales are trending up or down) saw only a “slight increase” in the holiday season, Best Buy Canada’s U.S. parent said earlier this month. Store closures actually contributed to an 8 per cent decline in “international sales” (China and Canada) this holiday season compared to last.
Meanwhile, Canadian online sales grew 50 per cent, Best Buy said.
“These changes in the way our customers are interacting with us have led us to look at how to best deploy our staff to meet those evolving needs,” Wilson said.
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