Best Buy Tests Smaller Shopping Areas to Focus on E-Commerce

(Bloomberg) -- Best Buy Co. is expanding its test of a new store format that reduces the space for customers to browse by nearly half to focus more on getting digital orders out the door, according to people familiar with the move.

The electronics retailer’s experiment is the latest example of how retailers are tweaking their business models to cope with the sharp uptick in e-commerce during the pandemic. The company plans to shift stores in one or two more markets to the new setup, reducing square footage used for shoppers to about 15,000 square feet from an average of 27,000 square feet, said the people, who asked not to be identified because the move hasn’t been announced.

The new format, first tested late last year in four locations near Best Buy’s Minneapolis headquarters, provides additional space to prepare digital orders for pickup or delivery from the store. A spokesperson for Best Buy declined to comment.

Best Buy’s online sales almost tripled last quarter, but it said demand could slow over the holiday season after Americans started shopping early for gifts. At the same time, the company is cutting some jobs at its stores, the Wall Street Journal reported Feb. 10. The remaining employees in its roughly 1,000 U.S. locations are getting trained to work in more parts of the store, which the company said “will drive efficiencies in labor planning and cost.”

Best Buy fell 2.3% to $114.05 at 12:38 p.m. Tuesday in New York. The stock climbed 29% in the 12 months through Monday.

The smaller sales floors will showcase fewer items, a shift from the heyday of Best Buy, when seemingly endless rows of televisions, computers and cameras were always on display. In a few locations, some of the additional floor space could be devoted to the retailer’s Geek Squad service desk. While it’s unusual for Best Buy -- or any retailer -- to tinker with its store layout during the holidays, Chief Executive Officer Corie Barry said in November that it was “imperative to move quickly.”

Best Buy temporarily closed almost all of its stores early in the pandemic, limiting customers to curbside pickup only. By the end of June, almost all of its stores were reopened.

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