22 July 2017

Gee, Training and Valuing Employees Works

While many brick and mortar retail establishments suffering, Best Buy is thriving because it trains and values its employees:


Five years ago Best Buy Co. looked like a retail dinosaur, another victim of e-commerce juggernaut Amazon.com and other online sellers.

The big-box electronics chain was suffering dwindling sales and profits due in good part to “showrooming,” when shoppers would come in to a Best Buy store to check out televisions, computers and other items in person, and then buy them at cheaper prices at Amazon or elsewhere online.

Best Buy also was struggling with executive turmoil and facing a buyout threat from a major stockholder. The chain in 2012 named a new chief executive, Hubert Joly, but the Frenchman came from the hospitality field and had no retail experience.

His appointment stunned analysts, with one saying that fixing Best Buy was “a herculean task even for an accomplished retail executive.”

But Joly has proved up to the task so far. Under his turnaround plan, Best Buy has rebounded to remain one major U.S. retailer that’s holding its own in the face of Amazon’s relentless growth and the conventional retail industry’s slump.

………

That’s keeping the pressure on Richfield, Minn.-based Best Buy to keep wringing more profit from each dollar of revenue if it hopes to maintain its momentum. Joly (pronounced jo-lee) already has shown it can be done.

His first move was to match any rival’s prices, especially those at Amazon, so that in-store shoppers no longer needed to buy elsewhere.

“We had no choice, we had to take price off the table and match online prices,” Joly said.

………

The company plowed a chunk of the savings into better training its employees so that they can explain products to shoppers, which Joly believed was critical because new technology often is confusing to many consumers.

Best Buy, with 125,000 employees overall, “has done an excellent job improving customer service,” [Piper Jaffray analyst Peter] Keith said in a recent note to clients.

Juan Ortiz of Glendale, who was at the Atwater Village store to buy a Nest Cam security camera, noticed the difference.

“If I’m going to spend a few hundred [dollars] on a security system, I want to talk with the employees and make sure I’m getting the best one,” Ortiz said. “It also helps that they explain everything. If I got it on Amazon, I’d be on my own.”
(emphasis mine)

The complete unwillingness of American management to invest anything in training its employees has always baffled me, particularly in retail.

My guess is that managers have been trained to treat their employees like crap, so any training serves to give them other options, which they will take, because you treat them like crap.

The result is a race to the bottom, and the commoditization of retailers, which gives you the purgatory that is Amazon.

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