Best Buy to cut holiday hires in half

  • Article by: THOMAS LEE , Star Tribune
  • Updated: September 27, 2011 - 9:14 PM

The retailer will bring in fewer temporary workers and rely more on its regular ones.

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Best Buy Co. Inc. said Tuesday that it plans to cut seasonal hiring roughly in half this holiday season, and instead require existing workers to put in longer hours.

With the weak economy making it tough to predict holiday sales, the Richfield-based electronics giant plans to call in 15,000 temporary workers, down from 29,000 last year.

Instead, it will try to hold down labor costs by having its "blue shirts" work more.

"This year we are focused on making sure that our most experienced, knowledgeable employees are there for our customers while also responding to our employees' requests for additional hours for more income," the company said in a statement. "Because of that, our labor hours are flat over last year."

Some analysts predict holiday sales to be flat compared with last year, while the International Council of Shopping Centers predicts chain store sales to increase 3.5 percent.

"Retailers are being cautious right now," said John Challenger, CEO of outplacement firm Challenger, Gray & Christmas Inc. in Chicago. "The economy is in very rough shape."

Retailers want to keep their options open.

Given the millions of people out of work, "retailers can have a double workforce: the ones they know they will need and the standby worker, where 'we will call you when we need you,'" Challenger said. "We don't know where this season is going. so all hands on deck."

Best Buy, in particular, faces a high-wire act. The company's sales at stores open for at least a year, a key metric of a retailer's performance, have been dropping.

"With same-store sales down, Best Buy is planning cautiously," said Matthew Arnold, a retail analyst with Edward Jones Investments outside St. Louis. "I think that's probably prudent. It makes sense to downsize."

At the same time, Best Buy said it wants to staff enough people in areas that have been growing, like mobile devices, games and online sales.

"As far as labor is concerned, we've been very pointful to not be making any material reductions in our store labor," Michael Vitelli, Best Buy executive vice president and president of the Americas, told analysts during a recent conference call. "All of the places where we're seeing the growth, that's where we're putting our labor."

In addition to the 15,000 temporary hires, Best Buy will add another 3,000 workers to staff telephone customer support lines and manage store and online inventory at its distribution centers. The retailer is also doubling the number of Geek Squad agents to provide technical support through online channels.

However, given the lackluster economy, Best Buy appears to be playing it safe.

"The consumer continues to be cautious," CEO Brian Dunn told the Associated Press in New York Tuesday. "That's not just a blip, that's the new normal."

Thomas Lee • 612-673-4113

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