Here at the Fool, we know you've got a life. Between working while the sun shines and catching Z's while it doesn't, you may find it hard to keep up to speed on Wall Street events -- corporate "investor conferences," for instance.
These meetings ostensibly benefit investors, but the companies behind them rarely transcribe their proceedings and file them with the SEC. As a result, unless you can attend in person, you're often left out in the cold. That's where our "Fool on the Street" series comes in. We listen to the conferences, so you don't have to.
Without further ado ...
Today, we'll recap the news from Best Buy's
Happy employees make spendy customers
McGeehan led off his talk with a thinly veiled poke at archrival Circuit City
McGeehan credits the quality of its employees with giving Best Buy "one of the highest jumps in ... the American Customer Satisfaction Index, all the way to 76%." To retain its position as one of America's favorite places to shop, Best Buy is taking a couple of actions.
First -- and in stark contrast to Circuit City's intentional dumping of its best employees in favor of low-wage drones -- Best Buy aims "to decrease our turnover in the stores [and] keep those associates there in not only the departments that they're working in but also in terms of the management ranks." Successfully, too. McGeehan advised that "retail turnover" -- referring to employee hirings and resignations, not sales -- "continues to go down." Moreover, management turnover that was in "the 25% to 30% range" a few years ago is now down to about 20% per year.
Why is this important? Because "if you interact with people ... you've interacted with ... before, you're probably going to have a better experience." Essentially, Best Buy aims to build relationship sales -- it's trying to keep employees on staff longer, so that customers who bought from a salesperson once, and were pleased with the purchase, can return to buy more from that same person in the future.
Second, Best Buy is trying to avoid the usual practice in retail -- hiring in good times and laying off workers in bad times -- by cross-training employees so that they can work in whatever department is currently "hot," and also by hiring more full-time employees and both "incenting" and paying them "differently." Different from what, McGeehan did not say. But the turnover numbers suggest that whatever Best Buy is doing, it's working.
At this point in the presentation, Skelley stepped in to give a spiel on his particular niche at Best Buy, known at the corporate level as "Services" and more colloquially as the "Geek Squad." Skelley's talk centered on two key themes: the growth in high-tech offerings, and the need to make high-tech user-friendly to consumers.
In terms of growth, Best Buy benefits from both isolated events -- such as Microsoft
The final point before I close is to give you an idea of how big Best Buy thinks its Services business is going to become. Skelley opined that what he's been doing in Services the past few years has been "laying the root system of our service network" that's eventually going to grow into "a massive oak tree." It's taken a few years to get the department's routing and dispatch system in place, its contract and billing platforms set up, and so on. But having laid the infrastructure, Best Buy should now be able to expand its services and use these platforms to support any new services for which it can find a market. That suggests on the one hand that the firm will now have more time to focus on building Services revenue and, on the other, that it may be able to scale back capital expenditures somewhat, now that the infrastructure is in place.
With Best Buy having built up a lead like this, one wonders how Circuit City's new ranks of undertrained, lower-paid worker bees are going to keep up.
Best Buy is a Motley Fool Stock Advisor selection. Microsoft is a Motley Fool Inside Value recommendation. What are you waiting for? Come and join either group of market-beating newsletter subscribers with a free 30-day trial.
Fool contributor Rich Smith has no position in any of the companies mentioned in this article. Nor does he have an iPod, HDTV service, or a plasma set. But donations are welcome. Every copy of the Motley Fool's disclosure policy comes with a free extended warranty included.