Best Buy article in Wall Street Journal [Archive]

core attitude

11-25-2004, 09:29 PM

Never saw it but here is a write up on the article.
Best Buy hopes to exorcize devil patrons
11/8/2004 5:22:13 PM, by Kurt "Kurt" Mackey
As far as the old adage "the customer is always right" goes, Best Buy doesn't buy it. The massive retailer is being vocal about something that at first might sound a little uncouth: frankly, they'd rather not have 20% of their customers as customers. In an age where it seems like everyone casts their nets as wide as possible to bring in more eyes, feet, and wallets, Best Buy is doing the opposite. They believe that a small portion of their customers are bad for business, and they're looking to shut them out. Of course, Best Buy loves their "angel" customers who buy things regardless of price, and load up on high ticket items. The problem is that the details are about the devils.
The devils are its worst customers. They buy products, apply for rebates, return the purchases, then buy them back at returned-merchandise discounts. They load up on "loss leaders," severely discounted merchandise designed to boost store traffic, then flip the goods at a profit on eBay. They slap down rock-bottom price quotes from Web sites and demand that Best Buy make good on its lowest-price pledge. "They can wreak enormous economic havoc," says Mr. Anderson.
Some see this as Best Buy trying to "have its cake and eat it too," by wanting to keep rebates, loss leaders, and massive promotions going, but exclude those who make routine use of them. Why not just stop with the marketing games? For Best Buy, it's not quite that cut and dried. While most of the promotions people "abuse" are rendered ineffective when well-educated customers have access to various bargain websites, the majority of Best Buy's customer base is still susceptible to them. Many people will go shopping for a printer (that Best Buy may be taking a loss on), and end up with extra print cartridges, printer paper and a service plan to go with it. Those customers aren't going anywhere for a while.
While the practice of labeling some customers as devils is by no means new, Best Buy's efforts represent the most concerted exorcism attempt we've seen from a major retailer to date. And it seems to be working. They've changed some of their policies to make them less vulnerable to exploitation, adding a 15% restocking fee and selling restocked goods over the Internet instead of in-store. More notably, they're attempting to explicity identify desirable customers and appeal to them directly.
Store clerks receive hours of training in identifying desirable customers according to their shopping preferences and behavior. High-income men, referred to internally as Barrys, tend to be enthusiasts of action movies and cameras. Suburban moms, called Jills, are busy but usually willing to talk about helping their families. Male technology enthusiasts, nicknamed Buzzes, are early adopters, interested in buying and showing off the latest gadgets.
Staffers use quick interviews to pigeonhole shoppers. A customer who says his family has a regular "movie night," for example, is pegged a prime candidate for home-theater equipment. Shoppers with large families are steered toward larger appliances and time-saving products.
Best Buy's strategies could represent the beginnings of a shift in how retailers approach their customers. As consumers become more savvy, and online shopping continues to grow, you can bet other retailers will watch Best Buy closely. Early results indicate that Best Buy's test stores are outperforming their established stores by a significant margin, and it's safe to assume that the trend will continue as they shift to their new sales mode across the board. Of course, if you aren't Barry, Jill, or Buzz, then who are you and how will you be treated? Customer profiling has a nasty side to it, one which we can attest to. It's common, for instance, to be utterly ignored in some commission-based sales environments if you look too young, or too poor.
Meanwhile, Dell and others seem to be doing their best to attract those customers Best Buy doesn't really want. While Best Buy has pulled the plug on their relationships with some of the more well-known bargain sites, Dell is using those same sites to run their promotions and clear out inventory with insane coupon deals. The biggest danger for Best Buy is the prospect of getting upside down. They run the risk of selling out for profit margins at the cost of sales volume.

JAM

11-26-2004, 08:46 PM

Speaking of Best Buy and E Bay:
TRUE STORY:
Early in the year I was looking for a new in-dash stereo for the boat in the Car Stereo section at the local Best Buy. Nearby were two employees; a supervisor (ID'd by his black polo shirt) and a blue-shirted salesman. I was about 5-6 feet behind them at the display and they knew I was there.
While the supervisor was at a computer terminal, the blue shirt asks him what the "employee price" is on a particular amplifier. I dont remember the model or the displayed retail price, but the supervisor types away on the terminal and answers "about $175". The blue-shirted punk then says something similar to, "Cool, I should be able to sell that on Ebay for about $225".
He was dead serious too, so I mad dogged them, told them that was "bullshit", then walked out. No lie - I haven't been back nor do I plan on going back.
While this may be an isolated incident, what the hell does Best Buy expect when their average employee age is somewhere near "15". What hypocrites they are to pound froogle customers who do their homework to get the best price through price comparisons...