Name: How Best Buy CEO Corie Barry is leading the company through a pandemic
Uploaded: 2020-05-13
Duration: 16 min 41 s
Description: And what the “new normal” looks like for the retailer.

 JEN WIECZNER: This is your first year as CEO. You became-- which seems sounds totally crazy, but you became CEO in June 2019. As a CEO I'm sure you're looking out ahead and looking for any potential risks or anything like that, but a pandemic is usually not one of them. What was on your radar as far as that goes and when did this coronavirus start to cross your radar. CORIE BARRY: I ruefully laughed with our risk and compliance team and said, we had never done a tabletop exercise on having a pandemic and the implications of a pandemic. We started to see some implications actually quite early. People don't even remember now, but one of the earlier stressors we faced in the year was tariffs and some of the conversation around tariffs. And we have been navigating the tariff situation throughout the year and as a part of that we had said at least 60% of our cost of goods sold flowed through China in some way, shape, or form. And because of such a large flow of our product comes from China, as soon as the pandemic started to lock down in China, which was toward the end of January as they were celebrating the new year, immediately we could start to see some of the potential implications on our supply chains. So even as early as our annual earnings release, our fiscal year release, which is at the end of February, we were talking about to begin with what we thought the supply chain ramifications would be. There were kind of three stages to this one. The first was how do we procure the right products ahead of potentially tariffs going into place. So we already had been stocking up in some key areas like appliances. The second phase was how might we move supply chains, simply because there wasn't supply, meaning the manufacturing facilities weren't running. And so we might pick a different vendor or we might try to move some inventory from a different country. Then the third phase as the American consumer started to be more and more impacted was, oh goodness people are going to need some different products than they were needing if I'm going to work from home or I'm going to learn from home. We definitely got the very early read as work from home became a reality, even before learning from home, that the demand was going to pick up in anything that would enable someone to work from home and to turn their kitchen into now their office. And so we absolutely started to double down on some of those products. It also became clear that people were going to cook from home. You could see it even in the consumers mentality, they were stocking up on supplies in huge cart loads to begin with. And they needed somewhere to put all of that. Fridges, freezers those type of things came into huge demand really early on. And then slowly you started to see the schools also dial back on in-person learning and so anything that would help with learning at home was kind of the next wave of things that we definitely saw demand uptake on. Every single one of us right now is sitting at home, working from home, learning from home, cooking at home, now entertaining at home. My son will not stop gaming at home. Ultimately most importantly, I think connecting at home. And every one of those capabilities is on the back of connected technologies in our homes. It really underscores what's been a hypothesis at Best Buy for such a long time. JEN WIECZNER: Let's go to March 18, when you make a big decision to reduce store hours and things are really starting to change. And then March 22, four days later, you switch completely to curbside. So shoppers aren't coming into the stores anymore. Talk about what was happening in those four days and all the decisions that went in to making such a huge conversion of how people shop at Best Buy. CORIE BARRY: There was an interesting confluence of data that all came in together in that intervening few days, and actually as we headed into even reducing the hours. One is we were hearing from our customers that they were growing more and more anxious and that safety was peaking as a priority. And that's not a word that had come up as a retailer, right. We use words like excitement and confidence and all of a sudden safety was the word. And it was becoming more and more evident that our employees were very concerned for their own safety and that was coming through loud and clear. And this was interestingly met by this really high demand window we were seeing, where customers really needed what we sold. And when we put all that in a blender we said, again, back to the principles-- if the safety of our employees and customers is number one priority then we need to lead the way in an operating model that will still get people what they need, but we'll do it in a way that will keep our customers and employees as safe as possible. And we actually did two things. We moved to the curbside model in literally a matter of 48 hours and we stopped going into people's homes. We also, of course, install. We repair, we do things in people's homes and we just could not look our employees or customers in the eye and say that, that was a safe experience. It was a very heavy lift for the organization. We had only rolled out curbside at 200 stores, so you can imagine the technology lift that was required, the training to your point and the buy-in from our employees. The ability even just physically to make signs and tell people where to go and what to do. Think about how a store is wired, just a normal physical store experience. If you were going to go in for in-store pickup, you would walk into the front of the store and then they might wander to the back of the store to get you your big stuff out of the warehouse. Within a matter of 24 hours the front of the store-- because no customers were actually coming in-- was completely set up. Taped off with little squares and little bins so that every single customer's curbside order was staged and ready to go and physically distanced, so that no employee had to get too close to another. And trust me I FaceTimed to a ton of GMs at this, because that's the only way I can do store visits now, and every single one of them has a slightly different solution for how curbside works in their store. And it works because they all just flat out decided that they will use the tools and their own knowledge in order to make it work. JEN WIECZNER: When you went to this model how did reality meet expectations? I mean, I'm seeing outside the Best Buy in Union Square in Manhattan, lines around the block for pickup. I mean, what was it like? CORIE BARRY: We weren't ready to move on a dime. Meaning when you saw the lines, trust me at least one customer in that line tracked down my phone number to let me know people were not socially distanced in that line. Which is great, because then we say, oh my gosh we didn't even think about how we are going to queue people outside a store. We therefore created a technology solution for that to text people when it was ready, so they didn't have to stand outside the store. That constant feedback loop when you do start to see the demand profile was really important. I think if I were being honest, we were surprised by the level of demand for a real curbside only, no feet in the stores type of model. JEN WIECZNER: What were some of the hardest decisions you had to make, or hardest moments that you were dealing with? CORIE BARRY: The single hardest decision I think that any leadership team has had to make through any of us is furloughing 51,000 employees. When we moved to the curbside model on March 22, we at that point said, we were going to continue to pay employees, whether or not they were necessary in the new model, because obviously running a model like this requires just a much more skeleton crew of employees. We said we were going to pay employees if they were sick or if they were caring for someone sick. And we said we also were going to pay employees if they needed to stay home and take care of their children, because they didn't have child care, which is another huge component for our workforce. And we did that for four weeks and part of the reason we really worked hard to pick that window is it would bridge people to when the federal stimulus program kicked in. And in many cases that federal stimulus program actually would compensate them more highly even than what we might compensate them. And that created, I think, a nice ability for employees to understand at least what they would get from Best Buy, take care of them and then help them. Importantly, the other thing we need to do is behind the scenes create the tools, the website, the places they could go to figure out, I mean trust me most of these 51,000 have never been on unemployment in their lives. And so we were able to create tools that would really help them manage through that as an employee base. And so even in the hardest decisions, again we were led with how could we protect that employee experience, that second goal, so that when we did have to have this conversation, we had all the tools available to help them understand what might be available for them from there. But, I mean never do you think you're going to have to wake up and Furlough 51,000 people. That is just not something that you would ever contemplate, or to your point write the manual for. JEN WIECZNER: You did a number of things in terms of cost cutting, because you suspended share buybacks and you even took a pay cut. How did you think about where can you cut and where you just can't, you have to preserve? CORIE BARRY: We wanted to make aggressive [INAUDIBLE] decisions across the business, so that our 51,000 furloughed employees didn't think it was just them. Or we had voluntary furloughs that were taking at corporate, it shouldn't be just them. JEN WIECZNER: In this month of May and the next couple of weeks, you're going to reopen about 200 of your stores, I think, but by appointment only. Talk about that a little bit. How do you know it's the right time to reopen, how do you figure out which stores can even do that in this model that you came up with? CORIE BARRY: I mean, I think there's two sides to this equation. There is, where do you open and where you open there's going to be dictated by a combination of what is the path of the virus. What are local jurisdictional regulations. And what is our employee availability, right. That's your, which stores do you open. And then there's the how. You started the question with how do you know it's the right time to open and how do you know what demand's going to be? Let's just be transparent here, there is no perfect knowledge of when the right time is or what demand is going to be, but you go in with an educated point of view based in fact. And then we'll alter our direction from there. I mean trust me, within, I think it was by three o'clock on day one, I already had in my inbox feedback from our stores on what was working, what wasn't and some of the tweaks we might already be making to the model. It's one thing if I feel like the interaction safe, it doesn't matter at all if the customer doesn't feel like the interaction is safe or frankly if the employee doesn't feel like the interaction is safe. And it's that last piece that we really spent a great deal of time creating experiences that would create what we hear from our customers and our employees feels safe and that's where we came to the appointment only model. JEN WIECZNER: Yeah. And so how does that work? I understand you've kind of compared it to like dating and there's a pre-interview that happens or a pre-call with the customer first. How does that work? CORIE BARRY: Yep, so first you set up an appointment, you can do that the ways you would assume-- call, online. Also if you just walk up to a store, we will help you set up an appointment in the moment. The next step is a pre-call and the idea there is for us to help you with what you should expect. And then for us to also ask some questions about whether or not you might be feeling sick. We will ask you to wear a mask. It's to just set expectations across the board for how the experience will work, because we'd like to avoid any in the moment confrontations. The more everyone understands, the easier it is. When you come to the store, you will be greeted by someone at the front door who, again, will explain how this is going to work. Also, if you don't have a mask as a customer we will have them available should you want to wear one. And then we will go into the store and you will be paired with an associate who will literally be your concierge throughout the store. And the store is geared so that everyone walks in a certain direction and it is marked, so it's very easy to keep social distance. We obviously have pretty large stores, when you're monitoring the flow of traffic like this it's very easy for us to keep social distance. Between every visit we will disinfect and clean every surface that would have been touched including the front lanes, which now have some of the sneeze guards in front of them and even the pin pads will be disinfected between every single employee. This flow of traffic control really allows us to maintain distance and disinfect in a way that's very different than any other retailer. JEN WIECZNER: It sounds very hands on, I mean the customer is getting a lot of one on one attention. There's somebody calling them and having a chat in advance. How do you scale that with your workforce? Are Geek Squad being redeployed to do these calls or? CORIE BARRY: That's what's fascinating, is again it goes back to a workforce that's really willing to be flexible in order to serve our customers. And again, because we do have a little bit more tenure we have people who've worked in multiple departments, to your point we might have Geek Squad Agents. Everyone is chipping in. And again when I'm on calls with GMs, I'll see there will be a Geek Squad Agent who's answering phone calls, because they might have the most knowledge about how to actually sell over the phone and help a customer without necessarily being face to face with them. JEN WIECZNER: You mentioned the furloughed employees, now that some of the stores are reopening, is that an opportunity to bring some of them back or what needs to happen before you can bring them back? CORIE BARRY: Yeah we said at this point we are not bringing any of them back. Right now we believe we can run this model with the employees that we have. Our goal is, of course, to do everything we can to bring them back. I don't know how long that takes and to your point, I don't know when it looks more like the model of old. And so those are exactly the questions we're working through now. JEN WIECZNER: The appointment-based model-- I know nobody knows how long this pandemic is going to last-- but do you see this as being the new future model of shopping at Best Buy or will we ever get back to just being able to walk in a store and shop around. CORIE BARRY: I think if you go back to that hypothesis at the beginning about safety and choice. This choice question, I think it's going to be a combination of models. So here's what I don't think it looks like. It doesn't look like you use yesterday's retail playbook to solve today's problems. I think instead you're going to see a combo of experiences that you as a customer could opt in to. Just hypothesizing, it may be you see a lot of demand on the weekend and people are willing to come back in and shop and you can create enough distance so your employees feel safe and that might be very much a shopable experience. But on the weekdays it's appointment only and you keep it a much more constrained experience. And you always have curbside if that's something you want to opt into. I think it's going to be a combination of experiences over time that, depending on where you are in the country and who you are as an individual and your own willingness to experience any one of these things. I don't think it's ever going to look like the playbook the way it looked before. JEN WIECZNER: So it's one thing to make the consumers and the in-store employees feel safe and comfortable. It's another thing for all your corporate employees, who I imagine a lot of them are working from home and Best Buy has over 100,000 employees. How are you thinking about, are they going to be working in the office anytime soon or how are you thinking about bringing those employees back? CORIE BARRY: Best Buy was kind of, in our hearts we had that like old school retail feeling. Like the stores are going to be open, everyone's going to be at work. And we knew we needed to change, but just hadn't quite had the impetus to do it. And then literally overnight all of our people corporately, about 5,000 of them, are all working from home. And it was such a phenomenal change and yet productivity on the whole was incredible. It will be a very staged and careful return to work plan. And our team is covering everything from, are you going to wear masks? Probably if you're in shared spaces. Will there be temperature checks when you walk in the building? Probably if it's proven to actually reduce the spread of the virus. Might we have an on site nurse that can help with testing or at least recommendations for testing? Onsite mental health facilities, because this is quite the change for everyone. And a really phased approach to bringing people back. There is a lot that goes into this question, because it's not just when can people come back to work, it is also their choices about whether or not they want to come physically back into the office to do their work, because kids may not have care for quite a while. They may be caring for someone else, or frankly they may just be worried about their own personal safety. And so we're working the suite of how best do we phase an opening of the corporate campus and create more sustainable work from home and reduced work week policies that will help just make this a part of how people are going to work from here. 

How Best Buy CEO Corie Barry is leading the company through a pandemic

Retail

Leading Best Buy through a pandemic

And what the “new normal” looks like for the retailer.