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Shopping: These retailers will either make it or break it in 2021
From J.C. Penney to Victoria’s Secret, here are 8 retailers who will either make it or break it in 2021.
Staff Video, USA TODAY
The days of jumping in the car to gaze at big-screen TVs at your neighborhood Best Buy may be numbered.
Best Buy could close more stores than usual in 2021 as the shift to online shopping accelerates with people more reluctant to venture indoors during COVID-19, CEO Corie Barry said Thursday during the Minneapolis-based electronics retailer’s quarterly earnings. The company has approximately 450 leases coming up for renewal in the next three years or an average of 150 each year.
“As part of the review process, we have closed approximately 20 large-format locations each of the past two years and expect to close a higher number this year,” Barry said. “We have also been reducing the length of our average lease term, which will continue to provide us flexibility.”
While the company’s online sales exploded during the coronavirus pandemic as homebound people stocked up on laptops, TVs and other gadgets, the retailer is shrinking the number and hours of store staffers. Best Buy laid off 5,000 full-time store workers earlier this month, Barry said.
“In addition to our physical stores, our operating model needs to evolve to meet our customers’ changing shopping behaviors that have been accelerated by the pandemic,” Barry said. “The sudden and lasting shift customers have made to shopping more regularly and seamlessly across all of our channels has forced us to look at how we get our work done.”
The company said it cut the jobs because more shoppers are choosing to buy online instead of coming inside its stores. It will replace the 5,000 full-time employees with 2,000 part-time workers.
Barry also said it is paying hourly employees an “additional cash gratitude bonus” of $500 if full-time and $200 if part-time or occasional seasonal.
Best Buy’s workforce has shrunk in the last year after having to furlough workers when it closed stores to the public in the early days of the pandemic. It currently has more than 100,000 workers, down 21,000, or 17%, from the year before.
Employees started being brought back from furlough in mid-June. In August, the company raised its minimum starting pay to $15 an hour.
The company is retraining workers to help with online orders. And more space in stores is being used to ship orders or to get them ready for curbside pickup, where shoppers buy online and pick up orders in the parking lot.
A group of workers posted an online petition calling for Best Buy to compensate employees for lost wages related to the cuts. According to the petition, the company began slashing the hours of employees at 150 stores on Jan. 10. About 792 of the nearly 4,000 signatures were from Best Buy workers, said Shannon Fulfs, the petition organizer who works at a Best Buy in the Omaha, Nebraska area.
Fulfs said workers struggled with the sudden loss of income of up to 40% and uncertainty about what to do because they were not told if the reductions would be permanent.
Best Buy said it was “not realistic to pay employees for hours they didn’t work, which is what a small number are asking for in this petition.”
“We told the petitioners that we disagree with their claim, but fully support their right to make it,” the company said in a statement sent to The Associated Press. “Like any retailer, our business model has always allowed us to adjust staffing to meet customer demand.”
Best Buy said its online sales soared 89% from November to the end of January, compared with the same period a year ago.
Revenue during that quarter grew 11% to $16.9 billion. Its profit rose nearly 10% to $816 million. Its adjusted earnings per share came to $3.48 per share, beating Wall Street expectations.
Sales online and at established stores, a key metric of a retailer’s health, rose 12.6% in the last quarter and increased 9.7% last year. It expects that number to rise 20% in the current quarter, but growth is expected to slow this year to fall 2% or rise as much as 1%.
Contributing: Associated Press
Follow USA TODAY reporter Kelly Tyko on Twitter: @KellyTyko