Today Best Buy announced that it was officially freaking out about the current financial meltdown: “In 42 years of retailing, we’ve never seen such difficult times for the consumer,” Brian Dunn, president and chief operating officer of Best Buy, said in a statement. “People are making dramatic changes in how much they spend, and we’re not immune from those forces.” A Best Buy employee forwarded us an email that went out to all associates this morning — stressing that a renewed commitment to customer service was the way forward during these troubled times.
Best Buy says:
A Message from Brad Anderson, Brian Dunn and Bob Willett
To all employees:This morning, we announced that we’ve seen a sudden change in consumer spending, in our comparable store sales, and in our expectations for this year’s earnings. We’d like to provide more context around these changes and their impact on our business.
The year started off well, with total company comparable store sales (sales at stores open more than 14 months) growing 4 percent for the first half of our fiscal year, a period that runs March through August. Our results were fairly consistent until September, when our comparable store sales turned negative, declining by 1 percent. Then our comparable store sales softened further in October, declining by nearly 8 percent, amid unprecedented changes in the financial markets, a deteriorating economy and weakening consumer sentiment. From where we stand today, we could see total company comparable store sales for the rest of the fiscal year decline by 5 percent to 15 percent.
Revenue gains are important to our business model because the majority of our costs ? such as rent and store operating costs ? are fixed. Typically, when comparable store sales increase by 3 percent or better, revenue growth outstrips expense growth (including merit increases, rising health care costs and the like), and our earnings rise. Currently, due to comparable store sales declines as well as spending increases, we have expenses rising faster than revenue. That’s why we’re now anticipating an earnings decrease for the year.
Specifically, today we also announced a new range for our earnings expectations: $2.30 to $2.90 per diluted share. The midpoint of our range is a 17-percent earnings decline compared with the $3.12 per share we earned last fiscal year.
Let us be very clear. These reduced earnings expectations reflect the unprecedented tumult in the financial services industry, which has reduced consumer spending across the board in retail. The outstanding work of our 165,000 employees doesn’t make us immune to our environment. We can’t change the overall level of consumer spending, but we can focus on deepening our relationships with customers wherever we interact with them: in our stores, on our Web sites and through our call centers.
While our comps have been negative, we gained market share in September and October. So we’re getting a bigger piece of a business that is currently shrinking. Customer satisfaction remains at all-time highs. Employee turnover is at historic lows. We firmly believe that our strategy of customer centricity is of great value in driving our performance versus the industry, and that’s the strategy we plan to pursue to continue to strengthen our position in the marketplace.
We must find ways to win with the customers who are coming to us today. Serving our customers better than anyone else is the best way to create value for customers, employees and shareholders alike. We need every employee engaged in serving customers better, and more efficiently. We want your unique perspective on what we should do differently in this market, based on what you see and touch, and using the talents you have.
We could let today’s turmoil distract us from serving customers. Other retailers might do that. But we will not. Instead, we will use these circumstances to redouble our efforts and deepen our commitment to each other, to our company, to our strategy and to the customers we serve. In so doing, we will strengthen and fortify ourselves as a team. A winning team. That’s who we are, and that’s Best Buy.
Brad Anderson, vice chairman and chief executive officer
Brian Dunn, president and chief operating officer
Bob Willett, chief executive officer of International and chief information officer
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Can someone PLEASE disemvowel that entire letter? Stop cluttering our internets with posts like that Brian Dunn!!!
I’ve sworn off Best Buy for this Christmas due to bad experiences shopping for games.
A couple weeks ago I went in to buy Fable II… it’s a hot new release, it’s out, Best Buy’s website shows it in stock in my local store… so I head over at lunch to buy it.
The clerks show it in stock in their system but nobody can find the game.
I waited for a half an hour (1/2 of my lunch) and eventually they turned it up. So I bought it, all was right with the world.
The next week, two more big releases, Little Big Planet for the PS3 and Fallout 3 (multi).
Again, same store, same problem. This time I walked, went to a local shop after work and they were more than happy to take my $130. I considered buying the new Guitar Hero game as well which would have put me at $190.
I sent Best Buy an e-mail outlining this, I had had problems with them before (trying to buy a game that was locked in a case and nobody could find the key.) They were kind enough to offer a $30 gift certificate for my trouble but I told them to keep it. I already bought the games I wanted.
But the problem seems to be they are so worried about people stealing games they’re making it impossible for people to actually BUY games.
Go to Target. they have all the games, with none of the attitude.
best return and exchange policies in the industry.
the ole’ bull’s eye isnt perfect, but i know they try; and often succeed. BB is going down following CC. Anyone remember Media Play.. now that was an awesome store.
Best Buy customer service. Now THERE is an oxymoron.
I hope BB goes down in flames, they deserve it.
I just removed myself from their list. They kept sending out emails and then going “Just kidding! This was a mistake. Have a great day!”
The very first response I read is hilarous, sell those extended warranties. A big problem facing electronic stores is can they make money selling hardware based equipment?
Back in the day of the VCR, when a VCR was actually made well, they could make money on the repair. But these companies got greedy and pushed out their best repair people just so they could skim the price on their replacements.
A tech who was good could repair three machines in an hour and create 200 dollars in billing, but if the tech was making “too much” money, companies preferred to try and dump the repair guy for a cheaper labor person. Who would then work half as efficiently.
Would you rather pay someone 15 bucks an hour for 200 dollars in billing, or 6 bucks an hour for 60 bucks in billing. These geniuses preferred paying less, making less, and having unhappy customers to boot.
Now that tape and analog and such is all going away, there is less and less to repair, and the customer will just throw out a cheaply made product and buy another one, and small mark up, then have it repaired.
http://www.DailyPUMA.com
I give Best Buy credit for this statement:
At least they recognize that these are hard times for consumers, and that is going to trickle down to them if they don’t do something about it.
Which is better than GM and Ford saying “Wah! These are such hard times for US! Help us! Bail us out!”
I was in there last week, a friend who was visiting needed a new computer on the spot as his old one died while he was on road.
He had a computer in mind he wanted and told the sales guy what he was looking for. The first thing out of the sales guy’s mouth was “you going to get the extended warranty?” We said no, he looked for about two seconds, “nope don’t have it”. He had absolutely no interest in helping out with anything else or making other recommendations. I was so unbelievably pissed off at the lack of service. We actually looked online at their kiosk. and found that they had it at another store down the road.
The next store was the same story. Told them we weren’t interested in the extended warranty. They looked and couldn’t find the computer even though the site said they had four or five in stock. It got to the point where we actually went looking for it and pushed the ladder around. We actually found one in the cages on top of the shelves.
Of course checking out was another story. We needed optimization, etc. What a complete pain in the ass! F Best Buy. The simple task of buying a computer took like four hours between going to the two stores and dealing w/the retard staff.
We know we have been sued countless times for cheating you out of breaks and pay and screwing the customer whenever possible!
So here is what this letter means to yu the best buy employee
No bonuses of any kind!
No hours!
No breaks!
Sell those extended warranties and 100$ HDMI and USB cords!
Don’t forget the uneccessary battery backups!
Enjoy the overpriced anti-virus and upgrades they need!
Remember customers want to overpay for the value they get!
Your lucky we don’t just fire you!
Make profits, we need our summer island getaways and HumV’s need gas too!!
Your pal,s
Brad Anderson, Brian Dunn and Bob Willett
Where was this attitude this summer when Best Buy soaked my wife and me for a $100 “restocking fee” when we returned a laptop with a defective wireless card? The tech booted it, SAID he could connect to the store’s wireless just fine, and told us there was nothing wrong with it, and naturally the clerk believed his five second experience over our two weeks of laptop hell.
We will *NEVER* buy anything from those shysters again. Crash and burn, “Best” Buy. Crash and burn.
I don’t hate Best Buy. I’m just not shopping there because 1) they have nothing I want and 2)I have no money to buy fancy tv sets anyway.
Sorry Best Buy — the best buy’s in the world and the greatest service in the universe aren’t going to get my business this year.
In poor economic times people are looking for the lowest price. BB suites are trying to establish value in lieu of lowering prices. I could give a rat’s ass about customer service right now, that’s a luxury. I will go where it is cheapest. That’s why I haven’t bought anything at BB for over 5 years except when I get a gift card. BB either needs to compete with online stores or get ready for some serious downsizing.
And don’t even get me started on the Geek Squad. The ONLY reason they are in business if because the average consumer doesn’t know independent repair shops like mine exist.
Being from Canada, I’m just so very glad to have a company up here that knows truly what great customer service is all about. They’ve been doing it right for well over 60 years now too. It certainly didn’t take a catastrophe to wake them as they’ve been doing it right all along. After dealing with Best Buy up here the one time I faltered, I’ll never shop anywhere else than London Drugs.
Quote: Customer satisfaction remains at all-time highs.
YOU GOTTA BE KIDDING! Do these guys read Consumerist? A Best Buy horror story is featured weekly, if not more often!!!
The bottom line is no one is going to give a toss about some wanker telling him to work harder so he can keep his Vegas action 4 times a year.
w.i.f.m.tell the guys what there piece is?if there is no piece then shut up they can work anywhere and be intimidated by dismissal.
Your all amazing… You all sit here and talk so much S**T about Best Buy, but I bet most of you were on the front steps this morning buying the newest expansion of World of Warcraft…Giving them your money. Yes, that statement today doesn’t make anyone feel good, but life it tough and the economy is in the dumps. If i worked there I would just be glad the statement didn’t say that “were cutting your position”.
I would have thought everyone hear would have rejoiced at a Best Buy customer service call to arms. So, you complain about the service, then when the CEO and COO tells every employee in the company it needs to change, the problem becomes even worse? The email says they have 165,000 employees. Should they have spoken to them all individually instead? They have a customer survey on the bottom of every receipt, and every store manager reads them. So, if you want something to change, tell someone that can do something. Otherwise, you’re all just like my ex-girlfriend: you don’t want it fixed, you just want to whine about it.
@narayan1121: But then that would mean that I would have to shop there, and actually pay their grossly inflated prices.
No thanks! I’ll let the LACK OF MY BUSINESS speak!
May Best Buy soon go the way of Circuit City and all the other shyster companies.
Customer service…whatever!!! I have been in customer severice and with the same company for over 10 years and if I treated our customers the way Best Buy treats their customers I wouldn’t have lasted 10 days!! I have only made two purchases with Best Buy and it will be the last time! I bought a front load washer from Best Buy in November of 2006. The reason I did was because they had a promotion going on for 24 month free financing. Well if I had paid just the monthly payment they asked for I would have been paying on it for over 9 years. Well that wasn’t going to happen because I planned on having it paid in full in that 24 month time frame so I more than doubled my monthly payment to make sure it was paid in full in 24 months. Well in March of 2007 I had to buy a new monitor for my computer so since the guy who sold me the washer was very nice I went back to Best Buy for the monitor and had it put on my credit card-still with the intention of having the washer paid in full in that 24 month time frame. Well that didn’t happen! When I got what I thought was a $200 some odd statement in (what should have been left from the monitor) they had tacked on over $500 in finance charges. When I called to see what was going on they said the monitor had been paid in full but I still owed on the washer and that was all the back finance charges since 11/06. When I argued with them that no one had even explained to me and that I hadn’t signed anything saying I would pay that kind of a finance charge all they would say is that they would only take off 50% of that finance charge. I told them I still wasn’t paying that and since the monitor was paid in full they could come and get the washer but they had better bring a scoop shovel because I would take it completely apart. My husband called back the next day and got a different person and they agreed to cut the finance charge 75% and we would have 10 days to pay it. I told my husband I still wasn’t happy but I would pay it and I would also let every person I know how Best Buy makes their money!!
Actions Speak Louder than words or does this just apply to the US? Over here in UK senior management are happy to loose customers forever as long they can save a few cents short term.
Best Buy own 50% of the UK cell phone retailer Carphone Warehouse CPW) and based on my experiences dealing with CPW and their head office they are adopting policies and approaches that do nothing but ensure customers shop elsewhere in future.
For example. If a phone is over 28 days old and goes wrong it has to go back for repair that repair could take 28 days. Actually the stores have quoted 6 weeks as being more realistic due to Christmas. They will only replace once the phone has been repaired 3 times!!!! so when the phone has been away for 3 months. 25% of a typical contract period.
You cant discuss the policy as they ignore letters, take 5 days to respond to emails and even then do nothing but quote standard policies.
Search the web and there is a wealth of examples of poor after sales service.
Brad Anderson needs to take a hard look at BB’s balance sheet and recognize that he doesn’t need the high end real estate locations or the slacker service reps salary expense. After looking for 2 days for a new laptop and finding that BB doesn’t seem to carry any of the 4-5 computers on display I was intereted in (at 2 different stores), in stock, I was told to order one online. Excellent slacker service. Follow Circuit City’s example; cllose the stores, outsource the jobs, sell exclusively online. I wonder why retail experts are projecting 2000-3000 shopping mall closures in 2009? Still don’t have a new laptop and I was itching to take one home tonight. Guess I’ll spare the gas,migraines and high blood pressure and log on to Amazon (again).