Report: Best Buy Confirms “Everyday Pricing” Model
Richfield-based Best Buy Company, Inc., plans to transition to an “everyday pricing” model, which the company says will ensure that shoppers will get the lowest price Best Buy can offer, according to a report by Bloomberg.
Best Buy CEO Brian Dunn recently told the news outlet that the company plans to alter its pricing model-a move that was rumored last month.
Retailers that offer everyday pricing essentially pledge to offer the best prices they can get from suppliers while still making money on each product.
Best Buy spokeswoman Paula Baldwin on Wednesday declined to comment on the potential transition but said that she “suspects the everyday pricing topic may surface” during Thursday's conference call with investors as the company reveals fourth-quarter earnings.
A press release issued Thursday morning reported that the company's fourth-quarter earnings dipped 2 percent to $651 million, while revenue was also down, totaling $16.3 billion. Excluding a $222 million charge related to the restructuring of its international operations, the company's earnings totaled $1.98 per share, beating analyst estimates of $1.85 per share.
“In fiscal 2011, we executed deliberate plans to drive growth in profitable areas of our business, focus and restructure our international portfolio to enhance returns, and improve our capital allocation strategy,” Jim Muehlbauer, chief financial officer and executive vice president of finance, said in a statement. “In fiscal 2012, we plan to continue these themes and expect challenges in the macro environment will continue to impact consumer spending within the retail and CE industries. Accordingly, our plans for the year include a range of potential outcomes to reflect this environment while also continuing prudent investments in profitable growth areas of our business and managing costs.”
The press release did not directly discuss the possible move to an “everyday pricing” model.
Dunn also told Bloomberg that his company is reorganizing its stores to reflect a “connected store” concept. According to the Bloomberg report, Best Buy's repositioning is part of a larger effort to attract customers that it has lost to other retailers, such as Walmart. Read the entire Bloomberg story here.
When rumors began circulating that Best Buy might adopt an everyday pricing model, Jim McComb, a retail consultant and president of Minneapolis-based McComb Group, Ltd., told Twin Cities Business that he is skeptical of the move.
“Retailers have turned the American consumer into a pack of trophy hunters” who are “trained to believe that the regular price is not the real price,” McComb said at the time. “The sale price is the real price.”
McComb said that consumers don't respond to everyday pricing initiatives in a consistent fashion-mostly, he thinks, because so many have embraced the “high-low” model that most retailers employ, under which the “high” shelf price is occasionally discounted to the “low” sale price.