Best Buy, the largest consumer electronics retailer in the world, is combating revenue losses by increasing its online presence for the holiday season. The electronics giant also plans to cut temporary hiring by half. The move is disappointing for the unemployed hoping for seasonal work. In the midst of these losses, the retailer is spending unprecedented amounts on lobbying.
Increased online presence
In order to combat its fifth straight quarterly drop, The Richfield, Minn.-based retailer is stepping up efforts to lure shoppers by bolstering its online presence.
“We’re moving our messaging to (the Internet), where we know our consumers are,” said company CEO Brian Dunn. “The consumer is going to make careful, thoughtful, measured choices around Christmas and the holidays.”
Traditionally, the holiday shopping season accounts for 40 percent of retail sales. About 70 percent of the U.S. economy is dependent on consumer spending.
Tablet computers and smartphones
Dunn predicted that tablet computers and smartphones will be the big sellers this season, so efforts are being made to push that inventory with increased online advertising. Best Buy hopes to grab sales that have traditionally gone to other retailers.
“You’re going to see robust growth in tablets and mobile phones, but the problem for Best Buy is they under-index in those two categories,” said analyst Peter Keith. Traditionally, Best Buy has seen 40 percent of its sales from personal computers and televisions, which do not have the growth momentum of the smaller electronic devices.
Hiring cut in half
Meanwhile, the retailer plans to hire about half of the holiday help that it did in 2010 — about 15,000 compared to about 29,000 last year. In the current economy, that is bad news, especially for those who are out of work and hoping for seasonal employment.
According to a survey by the Hay Group, a fourth of surveyed retailers plan to hire less temporary seasonal help than they have in past years.
In the midst of scrambling to recover losses, the retailer is spending an unprecedented amount on its lobbying efforts.
According to Reuters, Best Buy spent $530,000 on lobbying in the second quarter. That is up 8 percent from the first quarter, and an 83 percent increase from the second quarter of last year.
Issues lobbied by the retailer include electronics recycling, debit card fees, telecom standards, the Dodd-Frank Wall Street Reform Act, online sales tax, telecom standards, Medicare, and the Data Security and Breach Notification Act.