Best Buy May Go EDLP Route
Best Buy is looking to shift from "three decades of
tactical discounting" to
an every day low pricing model, as reported by Bloomberg News.
according to Mike Vitelli, enterprise executive vice president and president,
Americas for Best Buy, is that consumers using smartphones and other technology
are able to comparison shop and are unwilling to wait for a sale to come around.
Having low every day prices means (hopefully) fewer consumers will take their
business to the competition, which ranges from Amazon to hhgregg to Walmart.
Buy has made recent changes, such as dropping fees on returns to retain a higher
percentage of its shoppers. It also launched its new product buyback program
to help make it easier for consumers to upgrade to new technologies.
Pachter, an analyst with Wedbush Securities, questioned Best Buy’s move to
"Wal-Mart makes up for everyday low pricing in volume," Mr. Pachter
told Bloomberg. "Best Buy doesn’t have the traffic, so it
make sense for them. They’re losing better-informed customers who are
more savvy about alternative places to buy the same product."
management believes it has trained consumers to wait for sales before deciding
to purchase. Moving to EDLP, the company believes, will change that mindset.
Discussion Questions: Where do you come down on the EDLP versus Hi-Lo pricing strategy debate? What do you think about Best Buy moving to some form of EDLP?