An interesting question was recently posed by a Geek Squad employee through our Agent of Justice channel. The employee noted we occasionally have signs in the store – and she is coached to tell our customers – that the store is sold out of a certain product when there is actually a pallet full of that item in the back room. In addition to the frustration of not being able to give customers what they want “in the moment,” this employee feels it is dishonest of Best Buy to handle its merchandise this way.
I did some investigating and discovered this scenario does play out from time to time. There are indeed instances in which Best Buy stores hold back merchandise and do not make it available to customers on the floor for a few days. However, somewhat ironically, the reasoning behind this practice is actually very pro-customer. In most cases, the merchandise is being held in the back room to ensure a certain quantity of product is on hand when the Sunday newspaper ad appears. (Our ads will often state a minimum quantity available.) In other instances, merchandise may be held back to enable a particular store to compete more effectively with promotions being run by a nearby competitor, such as for a grand opening event by Retailer X.
Though inventory holds are common industry practice and are actually done to ensure more customers find products in stock more of the time, I can see how it could feel dishonest to an individual employee in an isolated case. My questions for you:
1) Do you think a retail store has an ethical obligation to make all of its inventory available for sale at any time? Why or why not?
2) What if we told customers the merchandise is on hand but “not for sale” until the Sunday ad appears (i.e., instead of saying it is currently “sold out”). Would that feel better/worse/same to you as a customer? Please explain.
3) Pretend you run the store. Which of the following would you choose to do and why?
a) Hold merchandise back to ensure customers responding to the Sunday newspaper ad find a certain quantity available.
b) Sell merchandise to customers during the week upon request and risk running out before the Sunday ad appears.
4) Can you think of any creative win/win solutions that have not been mentioned above?
I’m not an employee but a customer. Nothing here falls under “ethics”, except for lying to me about having inventory. If that is your practice to hold inventory for a Sunday sale (for whatever reasons, vaild or not valid according to anyone) – then that is your practice. I do not have to buy from you. But I do, until I have been lied to or have a really bad customer service experience. Unfortunately, I don’t except great customer service from any retail outlet. That’s the plain truth. But when it happens, I am surprised and thankful and let that person and their manager know.
This is a good question. It is an issue that comes up every Black Friday, especially on door busters.
As a company, we make these ads with “doorbusters” that are priced exceptionally, such that most of the customers that walk in that day would buy that item, even if they were not shopping for it. Best Buy’s advertising department does a great job clearly stating the minimum quantity in every store. Additionally, I work in an average sized store, and we had four or five times the minimum on all but three items in this ad.
We took the items for the ad and put them on pallets and wrapped them up to get ready for the Black Friday sale. That morning, we had about 500 people in line waiting on that merchandise. Some of those customers lined up on Wednesday and spent their entire Thanksgiving in a tent in our parking lot.
Another factor is that our ad’s are available online before they are actually good in the stores. Especially big ad’s like Black Friday are available on certain websites even before Best Buy announces them to the public. These websites generally post a copy of our ad before it is even available to us at store level. Combined with our excellent price match policy, customers will see these websites and come in before the ad starts to buy this product, thinking that we will price match it once the sale starts. This would make it totally unfair to the customers that waited in line for days to buy that product.
1) No. The ethical obligation is to have as much product as you can get for the customers that come in after those items go on sale and are advertised.
2) Yes. This is exactly what I do. I tell the customers that the product is not available due to future advertisements. I will try to show them a good alternative and explain the benefits to buying today versus trying to get a doorbuster deal.
3) A. I think when you advertise something you have an obligation to have that item; those customers came into your store because they saw you advertising it. There is no obligation to those customers that come in for a product when it is not advertised; we didn’t compel that customer to come into the store. As a substitute, it might be great to run pre-sale items on sale in the week before a really hot sale, so that we would have a legitimate alternative on sale for customers that come in before a hot ad breaks.
This doesn’t seem that difficult.
Lying is unethical here because you aren’t talking about some greater good or saving lives you are talking about inventory levels. That’s pretty straightforward and the other motivations you want to come up for the lie, even if they are rational, don’t make it ethical.
Secondly, if you have an obligation in print to customers that you will have “X” amount of inventory on Day Y then you need to have that inventory. Again, not having that inventory on that day for that advertised promotion is unethical.
Everything else seems to follow from these two and they really boil down to “don’t lie to the customer.”
If you have inventory beyond the minimum you must hold then sell that inventory. If you don’t then tell the customer you are obligated to hold the current inventory till Day Y.
Why does this need to be more complicated then that?
Our whole “Green Friday” plan revolves around having specially marked merchandise sitting in the store’s ‘back room’ for about a week so it is available the day after Thanksgiving. In fact, that is why I am physically at work at 4:30 AM Sunday Morning rather than being in bed like any sane person. We are about to deal with the first wave of specialty green friday.
Leaving that merchandise untouched is a legal obligation most of the time.
Being truthful in the style of “Yes we have a whole pallet full of this SKU but I can’t sell it because it is on hold for an add” may actually be in violation of our policies because we go to great lengths to keep what we are doing on Green Friday under wraps (Often at the detriment to efficient merchandise handling processes here in logistics. Right now I don’t know if I will be here for 6 hours or 16)
However, there should be a way for a sales associate to word his answer to be truthful yet vauge. I am thinking something along the line of “I am sorry, we don’t have any in the back room to sell you”. If the customer notices the specific implications of this statement and presses further, then a response along the line of “Here at Best Buy it is always possible that there is some merchandise we cannot bring onto the floor because it is a sold item, a replacement for a damaged item, internet sale item, or for date-sensitive materials”
@Anton: Thanks Anton; I agree on the peer reviews. I will look for more peer reviews that have an ethics learning embedded in them. Thanks for the call out. Kathleen
I don’t know if I agree with many of the characterizations here — particularly that the practice is “pro consumer.”
For one thing, the second cited reason, “merchandise may be held back to enable a particular store to compete more effectively with promotions being run by a nearby competitor, such as for a grand opening event by Retailer X.” That sounds like it has nothing to do with the consumer, and everything to do with being “pro Best Buy.”
Second, “inventory holds … are actually done to ensure more customers find products in stock more of the time” doesn’t strike me as quite true either. The inventory is fixed, so it’s not really a matter of “more customers” “more of the time”, it’s just “more customers” finding a product in stock “at some other time the seller decides.” In other words, it’s a zero sum game. One customers comes in a day early and gets turned away so that another customer coming in a day later can find the product in stock.
I will agree though that if there is a stated minimum inventory in an ad, that needs to be adhered to, but that’s not quite an “ethical” obligation as much as it is a “legal” one at this point. At any rate, I don’t find telling the truth in this situation (e.g., “we have a sale on these this weekend and have to hold a minimum supply by law”) to be particularly problematic. But the issue here is that customers are being lied to that the stock doesn’t exist, when it in fact does — particularly for reasons that are strategically beneficial for Best Buy.
As a side note Kathleen, I subscribe to this blog and I do have to lament the absence of the prior posts about specific ethical transgressions and employee terminations, their appeals, and how things were decided in the end. I thought that was an exceptionally interesting insight into a company’s attempts to handle employee terminations and ethical consequences in a principled way.
1. Of course not – that is a business decision. The ethical issue is not in the decision to withhold merchandise, but in the decision to lie to the customer.
2. I think I tipped my hand in my answer to #1. If you lie to a customer in this manner, you are not acting ethically. You asked, “Would that feel better/worse/same to you as a customer?”. That’s a false choice, because it omits the critical factor – I don’t know that I have just been lied to by Best Buy. Once you add that fact, it seems clear that a customer presented with the following choices would always choose “Option 2″:
#1: I ask for a TV set, the rep tells me BB is out of stock, and I know he is lying.
#2: I ask for a TV set, the rep tells me BB has stock on hold for a sale starting Sunday, and I know he is being truthful.
3. There are some facts missing, so I’ll make the following assumptions: a pre-sale customer pays the non-sale listed price and is not entitled to bring it back during the sale for a price adjustment. Given that, I would choose “Option B”, so long as the ad is clear that there is no minimum stock on hand.
4. Option B works fine, except in the “no raincheck” situation, where the item is a teaser to get people into the store. The store has a legitimate right to entice customers with limited-scope, high-discount deals. A hybrid approach where you have a bare minimum “guaranteed per store”, but you keep more on stock during the week seems reasonable. If it’s a raincheck item, there’s likely no harm.