Best Buy shrinks sales floors for a more fulfilling experience

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.

• Best Buy Co., Inc. (BBY) CEO Corie Barry on Q3 2021 Results (Earnings Call Transcript) – Seeking Alpha
• Best Buy Reports Third Quarter Results – Best Buy Co., Inc
• Best Buy produces record results doing things differently in the pandemic – RetailWire
• Best Buy tops estimates on strong online sales, but shares fall on lack of holiday forecast – CNBC