Best Buy is looking at taking a page from Walmart. A good page, though:

Shoppers at Best Buy”Every Day Low Price” is the mantra at Walmart, and now it seems Best Buy is considering adopting the concept as it tries to compete with online retailers and get consumers to shop during non-promotional events.

“We have to move rapidly in recognizing the transparency of pricing,” Mike Vitelli, executive vice president and co-head of the North America division at Best Buy told Bloomberg News.

According to a Best Buy spokeswoman, any shift in pricing strategy is in the very early stages of discussion, and there are no more details to share at this time. Why then, tell a national news agency during interviews conducted at Best Buy’s Minnesota headquarters?

I go to Safeway about twice a week and then Walmart about two weeks of every three. When I was living in Cascadia, I went to Safeway or Fred Myers once a week and then to Walmart once a month or so. A lot is made of Walmart’s low prices (some suggesting they are illusory, others that they are real, others conceding the latter point but arguing that they are low for bad reasons), but cut-throat price-point is never really why I shopped at Walmart. As I’ve mentioned before, it’s mostly about convenience. This includes price in a couple of ways. For instance, Walmart carries inexpensive options for those times when I don’t need something of real quality. But another thing is, independent of the actual price-tags, the pricing structure.

I have a Safeway card and used to have a Fred Myers card. With the Safeway card, prices on Safeway products are often competitive with – or maybe even better than – Walmart’s. However, it creates the problem where when I go to Safeway, I don’t know how much I am going to actually pay for anything. So I end up buying things based on whether they are on sale rather than whether I need them on a given trip. I have a utility room filled with softdrinks from a 2-for-1 sale from when they were really cheap, but if I were to have gone up there yesterday they would have been twice as expensive. All because of when I purchased it.

Walmart is not above that sort of thing (and somewhat recently has been getting worse about it), but at Safeway it is more often the rule rather than the exception to the rule. Walmart’s pricing has historically been blissfully straightforward. Prices fluctuate as they do with everything, everywhere. And when they are trying to get rid of something they will mark it down, but you don’t have to worry about time-consuming coupon-clipping, stocking up on things when they’re on sale and having to bite the bullet when they are not, or things like that. At least, you don’t have to worry about it nearly to the degree that you do at Safeway and the like. There is, to me, a value in (relatively) transparent pricing.

And then, of course, there is Best Buy. Never a company I hated more than nonetheless managed to get my business. And one of the big reasons I hate them is their opaque pricing. With Best Buy, it’s less to do with a “Best Buy card” (I don’t know if such a thing exists) and more to do with mail-in rebates (you can get a good deal, but only if you jump through these pointless hoops where we increase our margins by betting that you forget!) and huge markups on convenience items. There’s nothing inherently wrong with Best Buy’s way of doing things. Such things are uniform with restaurants that charge you $2 for a drink that costs them 10 cents while making considerably less margin on the food you actually went there for and with theaters that make their money on charging a lot of money for cheaply purchased and/or produced goods like popcorn and coke.

To some extent, it’s the nature of the beast. But it’s really nice to be able to buy something and so rarely notice that if I had waited a week it would have cost half as much. To be able to go in, get something, and get out without feeling like I had been ripped off because I did something wrong. It’s, perhaps oddly, something I am willing to actually pay more for. When I was in Cascadia I gave Costco a try. They had some really good prices there, but the pricing seemed particularly erratic depending on the deal they got on a particular product on a particular week. That, combined with the fact that I had to tailor what I purchased to what they had in stock, made the whole experience pretty off-putting for me.

There are a lot of things not to like about Walmart (Made in China, underpaid staff, pricing out the competition), as Web and others are quick to point out. But this (along with their generous hours and the convenience of having so many things at a central location) has definitely been a plus. And I hope that Best Buy follows through (and Walmart reconsiders its drift in the other direction). I shop there because it’s often my only (one-stop) option, but when I can I shop at Fry’s because they seem to price much more consistently and transparently. Yeah, there’s a pretty good amount of price-fluctuation (wait a week, save a bundle) because it’s technology, but there’s not nearly as much of it. And anything that makes Best Buy more like Fry’s is a winner, in my book.


Category: Market

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2 Responses to Pricing Transparency

  1. Peter says:

    Best Buy makes an undisclosed but reputedly very significant percentage of its profits from the sale of extended warranties. While the markup on most electronic items is small, and subject to heavy competitive pressure, extended warranties are basically money in the bank for sellers.

  2. trumwill says:

    Yeah. When I was looking at buying an HDTV from them, they wanted $280 for a warranty on a $800 TV ($750 with a mail-in rebate). They asked multiple times and I asked (pretending seriousness, but knowing what they were doing) if there was something about this model I needed to know about it. I bought the same TV for $650 (a month or so later) from Walmart with no warranty (beyond the manufacturers).

    Worse yet, from what I understand Best Buy doesn’t even treat those that do buy the warranty all that well. At least if I get a warranty from IBM/Lenovo, I know I will get the red carpet treatment if something goes wrong rather than 100,000 questions aimed at demonstrating that the warranty has been voided.

    On the other hand, at least a warranty is 100% optional. Unlike mail-ins, you don’t think you’re going to get that money back (you hope you don’t!) and things don’t get lost in the mail.

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