IS BEST BUY BACK? Maybe yes, maybe no.

Companies in trouble can often, though not always, deliver improved profit margins via rounds of cost cutting. The problem comes when the costs that were cut turn out to be things that helped the company appeal to customers. For example, a retail operation may cut floor staff. Over the short term, this delivers a profit boost, because people take a while to adjust their opinion of your brand. Over the long term, however, messy-looking sales floors and empty shelves encourage customers to go elsewhere, leaving you back where you were, except that you’ve spent down some of your valuable brand equity.

Here’s a Best Buy-specific example of how this might work: A couple of weeks ago, I found myself in Indianapolis for four days without my laptop power cord. I had a couple of hours to get a new one, and I raced to the nearest Best Buy — which, as it turned out, carried every MacBook power cord except mine. It didn’t even stock it. So I had to go back to the car and head to the Apple Store, having wasted half an hour. That’s probably going to impact my decision to turn to Best Buy in similar future emergencies — and because this sort of purchase is one of its key competitive advantages over Amazon, that matters.

Now, I don’t know that this was a result of cost cutting or some other sort of problem. The point is that customers who have that kind of experience tend not to come back. And stocking fewer SKUs, along with cutting floor personnel, is one of the major ways that retailers can save money.

I remember when Circuit City got rid of its commission-paid salespeople — some of whom made into the six figures — and replaced them with just-above-minimum-wage types. Bad move, as it turned out. . . .