Best Buy follows failed lead of Circuit City and cuts pay, jobs

Best Buy's decision to cut wages of thousands of its senior sales people, and eliminate up to 1,000 jobs, looks like a bad imitation of failed electronics retailer Circuit City.

In a reorganization of the consumer electronics chain, Best Buy is cutting pay by 25% to 50% for 8,000 senior sales associates who will be demoted, according to a research note by New York investment firm Sanford Bernstein, as quoted on

Sanford Bernstein also estimated that as many as 1,000 assistant store managers would lose their jobs. Best Buy wouldn't confirm or deny the estimates.

A Best Buy spokesman told CNBC that while it wouldn't disclose the number of people affected in the reorganization, the changes would put more sales people in front of customers. Many store managers and senior-level sales people will go to jobs where they'll interact more directly with shoppers.

That's great if it's true, although the 8,000 senior sales people who will see their pay drop by up to half are probably thinking of looking for new jobs. While the demotions aren't as bad as layoffs, they might as well be laid off if their salaries are being cut by so much.

Circuit City made a similar move in 2007 when it laid off thousands of its experienced sales people. As I wrote for WalletPop in November 2008 when Circuit City announced more layoffs, such decisions often are a harbinger of what is to come.

Think of any big purchase you've made, especially something technical that you didn't know much about. I've had many Best Buy, Circuit City, The Good Guys and other home electronics store workers educate me on products I've bought from their stores. But after Circuit City got rid of its senior sales people, you could see the level of customer service drop. I almost knew more than some sales people there, so I stopped shopping there.

If Best Buy's moves add more happy, well-paid and knowledgeable workers to the sales floor, then more power to them and thus more power to the consumer. But if the extra sales people are underpaid, inexperienced and can't explain the latest electronic gadget, then more customers are likely to walk out the door empty-handed.

Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job search at

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