Best Buy’s Fright Update
Last month I wrote a piece reviewing what many viewed as Best Buy’s fright before Christmas. I explored Best Buy’s announcement, days before Christmas, that overwhelming demand for some products from Bestbuy.com had led to a problem fulfilling several online orders made in November and December, beginning with orders placed as far back as the day after Thanksgiving. I then proceeded to compare this notice with CompUSA’s email two days prior to Christmas day, guaranteeing next day delivery. Essentially, while Best Buy couldn’t make good on highly advertised offers made for Black Friday, retailing’s hottest day of the year, CompUSA essentially provided less than a twenty-four hour turnaround at pretty much the last minute for shoppers to meet the ultimate holiday deadline.
Shortly after New Years Day, January 2 to be precise, a piece appeared in Forbes titled, “Why Best Buy Is Going Out of Business…. Gradually”. As can be seen by the title, no thoughts were minced. It was a sharp critique of Best Buy’s business practices. To be fair, the writer made it clear that gradually could mean several years, but was likely just a matter of time.
The indictment surely hit home both with industry experts as well as Best Buy brass. Virtually that same day, Best Buy corporate issued an explanatory statement on the mess that had been created by its admission of its holiday fulfillment failure. At the same time the critical article pretty much went viral. The piece has received well over two million page views since posting. The post has been tweeted more than 16,000 times. If this wasn’t enough proof that the writer hit a nerve, what happened next was.
Just days after the article’s publication, Best Buy CEO Brian Dunn posted a detailed response, directly addressing the critique. Dunn then granted an interview during which he predictably painted a rosier picture of his company than had recently appeared in the press after acknowledging specific challenges the company faces.
While many retail observers and customers had been critical of Best Buy’s bumbling some of its most important holiday orders of the year, equal and at times even sharper criticism was heaped on the company for an extremely late notification to affected customers. Notifying these customers just days before the holiday gave those poor souls little time to remedy the situation in order to provide loved ones with a proper alternative.
In recent years I have written several Insights highlighting Best Buy’s retail operations. Sadly, lately there were too few highlights and more observations on the company’s operational lowlights. Last year this space featured a piece revealing how many parallels Best Buy shared with Blockbuster. This was posted just prior to Blockbuster’s acquisition by Dish Network early last year and noted that, ‘Both now face challenging futures, though Blockbuster’s demise currently seems a lot closer than does Best Buy’s murky horizon’.
Shortly after Best Buy’s corporate responses to their frightmare, an online retail forum shared observations by member retail professionals. More than taking in their opinions on Best Buy’s actions and responses, I was struck by the number of heartfelt stories posted by these experts reflecting their own episodes of horror, experienced while dealing with Best Buy as consumers. This brought to mind a recent Christmas time episode at a local Best Buy that made me wonder how much the company had learned about dealing with customers, even after rather sharp corrections in policies such as eliminating restocking fees and advertising liberal return edicts on televisions just prior to the Super Bowl.
I happened to be shopping in a Target a few nights before Christmas and noticed that a recently introduced camera which I had coveted was selling at its lowest price yet. To make a purchase even more tempting, Target was offering a $50 dollar gift card with the purchase. One drawback that had prevented me from purchasing this camera earlier was the lack of availability of backup batteries as this model apparently had introduced a brand new proprietary battery.
The next day I was passing a Best Buy and decided to explore their price matching policy. After several uncomfortable financial quarters, Best Buy has begun to reverse some not so customer-centric policies including extending price matching.
I first asked an associate, who was eagerly involved in gulping a diet soda, about the availability of backup batteries and was sternly told that the camera uses AAs. When I expressed my doubts she restated her position. Finally she checked the box, avoided eye contact and mumbled that she would see if the store had any of these proprietary batteries or a substitute. It did not.
I then asked about the price match. As Best Buy had the same sale price as Target the question was would they match the gift card offer. The associate called her supervisor to determine her course of action and then immediately checked Target’s website and confirmed the price but noted that there was no mention of a gift card. Thus I was informed that it was up to me to provide written proof of the gift card offer before Best Buy would issue a gift card of its own.
For another camera, which Target also offered for the same price as Best Buy, Target’s website offered an even greater gift card deal. It turns out that for Best Buy to match this, the associate must call the nearest Target to be sure the camera was in stock. Though I assured her that another Target nearer my home had had several in stock the night before, I was informed that only the local Target mattered.
An identical situation prevented Best Buy from selling me a camera during the latter months of the existence ofCircuitCity. CircuitCity’s price was well below that of Best Buy. As the nearby (about a seven minute drive away)CircuitCitywas out of stock on this model, Best Buy refused the match. TheCircuitCitylocation near a friend’s house did have stock and got the sale. This was less than a twenty minute drive from the Best Buy location.
My impression after this latest experience in price matching futility was strongest in terms of the hubris shown by Best Buy’s policies through their employees. Restricting customers to a match from only one nearby store and to require proof of availability when there are so many competing venues within a modest commute shows that Best Buy is still corporate-centric rather than customer-centric. After all a Target gift card is far more versatile than one from Best Buy. It can purchase anything from groceries to HBC to consumer electronics to apparel, generally at very attractive price points. Best Buy on the other hand is noted for high markups on most accessories which is about all this gift card would cover.
If all this is not enough for an investor to wonder about the retailer, as I was leaving the store I heard a rendition of a favorite song, Ave Maria. As I approached the speaker system I was stunned by the lack of audio clarity and what seemed like ambient noise. Clearly there was a problem with the setup of the speakers or perhaps with the speakers themselves. What a way to promote hi-tech equipment.
Lastly there is the issue of the stores themselves. Several years ago I visited a consumer electronics retailer during what turned out to be its last year of its existence. I was stunned that this super-sized store, offering the latest in flat screen TVs and digital cameras, appeared almost as a throwback to retailing of decades past. Best Buy stores which I have visited across several states in recent years do not revert as far back in time but fail to make a statement to nearly keep up with the high-tech products they continue to bring in. Several professional colleagues and friends soundly concur. This is at best a questionable way to promote a retail experience in this increasingly competitive consumer electronics world.