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The “vast majority” of cost savings have come from squeezing efficiencies out of nonsalary expenses, he said. “Believe me, these reorganizations and head count reductions are not fun for anybody.”
“Sometimes it is inevitable, and you have to do it,” Joly added. “But we’re not declaring victory based on reducing head count.”
Joly said the company continues to invest in people and technology when it serves efforts to build online traffic or bring new customers to stores. A pilot project to put 5,000 tablet computers in the hands of sales-floor workers has proved to be a smart investment, he said.
Workers can get instant access to product information, product availability and competitors’ prices, all while talking to a customer. “We have to adapt to the times,” he said.
A bright spot for the company came in online sales and in Best Buy’s “ship-from-store” service that has been expanded to all 1,400 locations. That program allows stores to fill online orders, which has sped up the delivery window by two full days and saved some $400 million in the cost of returned products.
Online sales increased by 26 percent, compared with an 11 percent bump last year, with sales picking up after the holidays. Joly acknowledged the company “has some catching up to do,” but said that it is gaining market share online as well.
Sales from the company’s website accounted for 12.7 percent of total sales in the quarter, up from 10 percent a year ago. The company replaced its decade-old search engine before the holidays, which it said provided a needed boost in transactions, and that it expects even bigger payoffs in the year ahead.
Half of online purchases are picked up in stores, which the company sees as a competitive advantage over online-only retailers.
“We love that,” said Chief Financial Officer Sharon McCollam, who said it gives store workers the chance to interact and “build relationships” with customers.
“One thing the competition cannot do is give it to them at this very moment.”
Staff writer Steve Alexander contributed to this report. Jackie Crosby • 612-673-7335