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Retail Industry April 12 - 18, 2009: Store Openings Up, Closings & Job Cuts Down

Major Best Buy Pay Cuts and Hobby Lobby Pay Raises Get Criticism and Praise


In sharp contrast to the Hobby Lobby news, many people were equally shocked last week when the Wall Street Journal reported that Best Buy will be demoting and cutting the pay of its senior sales employees and restructuring the staffing in its stores to eliminate many of its assistant store managers. Speculation is that 8,000 Best Buy employees may see as much as a 50% pay cut, and as many as 1,000 salaried workers may lose their jobs.

It’s not the pay cuts or layoffs that were the shocking part of the report, it’s the fact that the Best Buy executives seem to have attended the Bizarro World Executive Strategy Summit, hosted by Philip J. Schoonover. We have all read this story before, and it ended after Chapter 7.

I didn’t read in the Wall Street Journal about the 50% pay cut that Best Buy CEO Brad Anderson and his executive team are taking, though. Perhaps we’ll hear about that in the official corporate press release.

It will be fascinating to see how Best Buy executes the Circuit City-esque strategy without it resulting in a demoralized and disengaged workforce, unmotivated to do what’s in the best interest of the customers or the company.

Personally, I haven’t really experienced the mythical friendly and helpful customer experience that Best Buy supposedly delivers. I certainly haven’t encountered any portion of the enthusiasm that I see portrayed by those hip Best Buy employees in the current TV ads. In all fairness, I might not be shopping in the departments where the knowledgeable and friendly employees are staffed. Perhaps there is a different customer experience that happens in the big ticket aisles.

The Best Buy cashiers do seem to be quite knowledgeable about certain things. And if “insistent” is Best Buy speak for “helpful,” then I will have to concede that the service plan promoters behind the cash registers are extremely “helpful.”

Actually, pay cuts in lieu of pink slips is a not a completely ill-advised strategy. Since the American economy is in the middle of a Wal-Mart style rollback, either we all endure the pain of pay cuts together, or else we will watch a significant percentage of our unemployed friends, family, neighbors and co-workers endure it individually. Of course, eventually, a unilateral rollback will occur one way or another. It probably will not happen without some more pain.

Thank goodness there are brave retailers like Golf Galaxy, Jimmy Jazz, Wireless Zone, and Ticketmaster that will continue opening stores and keep hope in the retail industry alive.
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