By Frank Shyong, Los Angeles Times –
It’s 8 a.m. Sunday and John Palyok, general manager of a Best Buy store in Burbank, Calif., is brandishing a $19.99 Dynex HDMI cable like a battle standard.
A group of 50 employees, mostly in their 20s, gather around him, gulping coffee and nodding slowly.
“It’s about speed, velocity and execution,” bellowed Palyok, his voice echoing through the store’s cavernous, 45,000-square-foot interior.
“They need, need this HDMI cable,” Palyok said, slicing the thin blue box through the air like a battle-ax. “The absolute worst thing that could happen is if a customer goes home and doesn’t know that it exists.”
And Best Buy needs Black Friday and this holiday season to generate strong sales. The good news is that since at least Monday, customers have been setting up tents outside stores to be the first in line for the chain’s big specials at its midnight opening Friday.
But the bad news has been the increasingly rocky times. Since April, Best Buy has ousted its founder-chairman, chief executive and two senior U.S. executives, and has closed 50 stores nationwide.
Its stores brim with DVDs and hardware that customers are increasingly buying online from other companies. Its online sales aren’t growing fast enough to compete with the likes of Amazon.com Inc. or to make up for the loss of in-store sales.
Though still dominant in the retail electronics market, Best Buy is plagued with, among other things, high overhead from what are now considered oversized stores.
On Tuesday, the Richfield., Minn., company reported a loss of $10 million, or 3 cents a share, for its fiscal third quarter ended Nov. 3, compared with a profit of $156 million, or 42 cents, for the same period last year. Same-store sales, a key measure of growth, fell 4.3 percent.
Chief Executive Hubert Joly called the results “clearly unsatisfactory.” At an analyst meeting last week, Joly laid out a plan to close and reformat stores as well as tinker with the number of big-box locations and smaller mobile stores in the company’s roster. He also said he plans to bolster the quality of customer service and slash costs.
Still, Best Buy stock has plummeted about 50 percent so far this year.
But good numbers on Black Friday could give Best Buy some crucial breathing room — a good holiday season can account for as much as 40 percent of a retailer’s annual sales.
“It sets the tone for the rest of the season,” said Michael Pachter, an analyst for Wedbush Securities. “If you’re down on Black Friday, you’ll be down the rest of the season.”
On Monday, Nick Valencia, an aerospace engineer from Huntington Beach, Calif., and a dozen others already taking up their posts outside a Best Buy store in Irvine, Calif., said they were looking for flat-screen TVs and other electronics at big discounts.
Best Buy, for instance, plans to sell a limited number of 40-inch Toshiba high-definition televisions for $179.99, one of numerous bargains it is offering to try to lure customers into its stores.
On Sunday, Palyok and Best Buy stores nationwide got ready for the big day, putting employees through a high-octane practice run to make sure that things go smoothly.
“We have to learn to control the chaos,” Palyok said.
Palyok’s employees split into four groups with a cry of “Everybody to your battle stations!”
At the cash registers, employees learn to suggest HDMI cables and other bundled items. In computing, they’re taught to offer Geek Squad protection at a large discount. In home entertainment, the goal is to persuade shoppers to buy bigger, more expensive televisions. In the back, a group of 20 broad-shouldered men and women are assigned to crowd control.
Palyok said his management team at the Burbank store has been planning the operation for more than a month.
In his office, which he has dubbed “the war room,” there are large annotated schematics of the store covered with a color-coded constellation of stickers showing each employee’s location. At the top of each store map, there’s a target sales figure that cannot be disclosed. At the bottom, near the checkout lines, someone has scrawled in black marker “Feed the Machine,” a reference to the cash register.
“We say this every year, but it’s the most important weekend in the history of Best Buy,” sales supervisor Carlos Portillo said.