Best Buy is trimming its Geek Squad workforce by roughly 400, with an aim to outsource employees who work in remote positions nationwide and transfer affected employees to other positions, The Minneapolis Star Tribune reports. The company did not immediately respond to a request from Retail Dive for comment.
“Affected agents will have a job, if they choose, with similar pay and responsibilities,” Jeff Shelman, Best Buy spokesman, said in a statement to the Star Tribune. “We very much want to keep them and are working hard to do that, especially because we currently have nearly 1,000 open jobs.”
Meanwhile, Best Buy also recently launched an “Assured Living” service in the Twin Cities that allows adult children with elderly parents to check in on them, according to a company press release emailed to Retail Dive. The feature offers a free up-front consultation between Best Buy’s Geek Squad and customers to figure out the ideal set-up. Devices include voice-controlled lights, locks and thermostats, video monitoring for caregivers, and cameras to monitor visitors at the front door.
News of Best Buy's new service, as well as job cuts to its Geek Squad team, comes just weeks after Amazon announced it's building up a technology consulting and installation offering to rival Geek Squad, one of the electronics retailers best differentiators.
Increased sales in connected home are among the segments helping Best Buy stay competitive. The retailer's recent push into sales of new technologies including smart home devices and new gaming technologies could open a path for future growth. GlobalData Retail Managing Director Neil Saunders told Retail Dive last month that he is "encouraged by some of the steps Best Buy is taking to ensure it delivers growth."
"Foremost among these is a view that sales of newer consumer technologies, like smart home, can be stimulated with good customer service, advice, and demonstrations," he said regarding the company's first quarter. "From our data, we see that there is an appetite among consumers to know more about this sort of technology, and we believe Best Buy is in an ideal position to inform and engage."
The retailer is holding its own against Amazon, which has boosted its electronics sales and taken market share from Best Buy, Walmart and others. Five years ago, Amazon had 6.2% share and ranked No. 4 on the list of top 100 U.S. electronics retailers, according to a note from Deutsche Bank analysts last year; as of last year, it was No. 2 with 17% share, jumping ahead of Walmart.
Best Buy saw Q1 sales rise 1.6% with total Q1 revenue reaching $8.5 billion. Total same-store sales rose 1.6% company-wide and by 1.4% in the U.S., while U.S. e-commerce same-store sales rose 22.5%. After executives raised their guidance for the year and beat analyst projections for the quarter, Best Buy stock enjoyed a 14% bump in pre-market trading.
Best Buy last year announced it's working to beef up its customer service by expanding store associate training and enhancing its Geek Squad tech support team. Best Buy CEO Hubert Joly told Fortune at the time that the company is in a unique position to help customers make sense of an increasingly complex technological environment.
The thing is, Best Buy has to differentiate its shopping experience if it can’t differentiate its merchandise. While the retailer does have its own exclusive lines of electronics, the main differentiator remains price, which Amazon — more willing and able to forgo profits in its retail operations thanks to its hugely profitable cloud computing business — is often able to meet or beat. Assured Living, a particular niche in the connected home category that takes a careful level of consultation, was based on consumer research and has seen an extremely good response, Best Buy executives told the Star-Tribune.