NEWS - Thursday, December 1, 2005

Best Buy Caught Red Handed

BEST BUY HAS ADMITTED some of its employees stepped over the mark when it launched the Xbox 360. People who queued up in the Pacific Northwest lined up for hours in the cold to get one, clutching adverts promising list price, got a rude surprise. Most of the people who queued up went away empty handed, because the advertised list price was not what they actually had in stock. Best Buy would not sell them for the advertised price, but only with a bundle that just about doubled the cost. Games, controllers, cables, and other high margin knick-knacks so if you didn’t pay $800 you couldn’t get an Xbox 360. We originally wrote about this debacle here, and you should pay close attention to the number of similar stories throughout a specific geographic area. There were several stores across several states that did more or less the same thing. We asked Best Buy whether this was a general policy or confined to individual store managers looking to pump up daily numbers. Best Buy corporate PR told the INQ that cases were isolated. A Best Buy representative said: "We are aware of instances where Best Buy employee action was inconsistent with company guidelines for promotional activities surrounding the sale of Xbox 360. We will accept returns or exchanges for any unwanted Xbox 360-related purchases. In addition, we have taken appropriate measures to ensure this situation will not occur with future Xbox 360 promotions. We extend our sincere apologies to our customers." An internal Best Buy memorandum seen by the INQUIRER and sent on Tuesday 11/15/2005 at 8:02am to several mailing lists at Best Buy, mostly managers in the Pacific Northwest, instructed stores on what was to be done. The mail was sent a week before the launch date, and before the ads hit the press. The memo contained five ’quick notes’ and a shorter note at the end. "We will be selling our units in packages," the memo said. "Each store should hold back three to four units of each model for those customers who put up an argument about being able to only buy the unit. Everything else will be sold in bundles. This keeps us in alignment with everyone’s expectations." Sales managers, the memo continued, would be in charge of the 360 launch and stores should use the "very best" sales people for the launch. It said that stores’ future allocations depended on attachment sales "so you need to get it right or you will pay for it in December when new allocations of product are distributed". Best Buy was advertising a nine AM opening time on the 22nd and stores had to stick to that time. Best Buy had such low quantities that it needed to be careful with the advertising. The memo said that if stores opened early and sold all their units before that time, it could be in trouble for false advertising. Sales people were told to sell up around the Xbox 360 using the "halo effect". Customers wanting 360s would also need HD TVs, and surround systems. It concluded: "Folks, it’s like milk and cookies". According to sources at Best Buy, three things happened after the memo was sent. A number of individuals at Best Buy did not like this. As our previous article said, an unprecedented number went to the media directly, a rare occurrence for a corporate entity. People internally were annoyed, and spoke out in the only way they knew. We also heard of managers posting notes and flyers on the doors of the store telling of the ’new’ bundling policies to warn customers. One source said that the policy outlined in the memo was not approved at a corporate levels. "Some stores went too far and issued official correction notices for the ad that did not come from corporate. A few Portland stores did that. A few stores made people wait in sub freezing temps all night to only then tell them about the bundles." It seems that a people at Best Buy were trying to look out for customers. The ones that did, appear to have disobeyed orders to do so. The INQUIRER has heard that some managers asked to implement the memo were not happy about their instructions and asked for a letter in writing to confirm the instructions. We haven’t seen a copy of such a memo, if it does exist. * THANKS to Stuart Gorman for contributing to this article, and to the sources at Best Buy.


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