Interviews

Best Buy President: Consumers Focusing on Value

Exclusive: Mike Vitelli on expectations for holiday shopping season

 

This is a rush transcript from "Your World," November 23, 2011. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST OF "YOUR WORLD": Will all of these extra early doorbusters be a boom or a bust? Maybe not if you are willing to camp out like these folks a Best Buy in Bakersfield, California. They are hoping to cash in on a number of great buys, but a limited doorbuster deal. It's a scene playing out pretty much across the country.

Mike Vitelli is the president of Best Buy. He joins me now in this exclusive chat.

Mike, good to have you.

MICHAEL VITELLI, PRESIDENT, BEST BUY: Good to be here.

CAVUTO: These are big reasons to grab people, but what has them camping out? I always wonder what would make me camp outside a store?

VITELLI: It is a cultural experience and we have seen over the years...

CAVUTO: That's one way to put it.

VITELLI: ... a lot of different demographics that are there.

It could be moms and daughters, and fathers and sons, and families. In fact, this year at 120 of our stores, we're actually going to be showing the recent DVD release of Harry Potter's new movie in the parking lot of 120 stores. So that waiting time will be a little more fun and a little interesting.

(CROSSTALK)

CAVUTO: But some of these guys are there now.

(CROSSTALK)

VITELLI: Yes.

CAVUTO: You don't open up until midnight tomorrow nation. Right?

VITELLI: That is right. That's right.

CAVUTO: So are you going to play the movie on a loop?

VITELLI: No. It will start at 9:00 in most locations on Thanksgiving.

CAVUTO: Alright, we talked a little bit, Mike, about the doorbuster deals and these incentives to get people to come in at midnight and show up. We're gonna get into some of the controversy of having workers come in. They have been -- maybe yours have -- I don't know -- but you have heard from the Target and the other workers that they are not too keen on that.

But having said that, I want to through some of the specials that you're having, because some of them are pretty eye-popping. And I'm wondering if there's a strategy here -- 42-itch flat screens normally $500 not even $200, laptops that are third their normal going price, tablets that are going for a song. But there is a limited quantity, right?

VITELLI: And that has always been true. That is part of what a door buster deal is. It's kind of been the tradition for years.

But I tell you, if you looked at the insert, there are doorbusters on the front and back cover, there's 800 other items that are in there, there are some limited quantities, but if you looked at our stores right now, you would see more inventory in them than we have ever seen.

CAVUTO: Alright, so normally, stores are required to have a minimum of 10 of these products, right?

VITELLI: That is right.

CAVUTO: Imagine being the 11th guy on the line --

VITELLI: Well, you know, we do a great job with that, I think -- is that you know that before you are even in the store, because not only do we do a job with queuing the people. But we're actually giving out tickets for each of the door buster items.

(CROSSTALK)

CAVUTO: How do you police the potential trampling or crowding out?

VITELLI: We have worked the lines for years. It's one of the things I'm most proud of about our people, about what they do to manage the line, make the people feel comfortable and communicate with them throughout the whole process.

And in fact, I think opening early will actually even help because people, as you said, are online now. So waiting until 5:00 or 6:00 in the morning, that is just additional hours that they were already going to be there. So I think it'll be better.

CAVUTO: Right. Right.

You know, you never know. I don't whether you can take people or shoppers at face value on this subject of being open on Thanksgiving or opening even midnight, but we did talk to a few today. And they have a mixed mind on this, this is just shoppers talking about you guys being open.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I really think it is a day for people to be home celebrating with their families.

UNIDENTIFIED FEMALE: I think it is awesome, it gives us a great opportunity to shop more.

UNIDENTIFIED FEMALE: I would rather shop on Thanksgiving Day than have to get up at 3:00 in the morning to go shopping.

UNIDENTIFIED FEMALE: I feel bad, I think families should be home and should be together.

UNIDENTIFIED FEMALE: I think Thanksgiving should be for family.

UNIDENTIFIED MALE: I am just ready to go. I'm ready for Friday. As soon as it hits 12:00, I am out on the streets and I'm not going home.

(END VIDEO CLIP)

CAVUTO: What do you make of that?

VITELLI: I think that is the diversity of opinion in almost every topic in the United States, but what is great about that is we are able to satisfy each of those people --

(CROSSTALK)

CAVUTO: Have you had your employees who are saying, oh, no, you're doing this on Thanksgiving, I don't want to do that?

VITELLI: I am sure there's a few that have done that. In fact, when we worked the shifts, there are people that say, I can't work the early shift, I will work the second shift. And the teams have done a great job.

(CROSSTALK)

CAVUTO: Do they get time-and-a-half working or anything like that? It's a holiday --

VITELLI: Well, if you're on Friday, it not. But if they are coming in early on Thursday itself, to actually start, yes, that would be true. So there is overtime and it's different by state --

CAVUTO: But this year more than other years - and ya know, I know your own CEO has talked about feeling badly about this -- but there does seem to be a concerted sort of a response on the type of -- on the part of workers who are saying enough already, and ya know hundreds of thousands signing these petitions, be they Wal-Mart or Target.

And I always say, well, if that is the business and the nature of the beast, you can always work for the government or do something else. But do you ever remember this type of response on the part of workers in general to working that day?

VITELLI: In general, I would say no because we haven't seen it as much.

For us, this is our first year that we are doing it. But I think the variety of ways that people wanted to shop in the comments that you captured are exactly right. Our BestBuy.com site will be open on Thanksgiving. There will be people that want to shop that way and shop directly from their chair or right on their phone. There are people that enjoy the event of getting in line. You say you wouldn't do it, I might not do it either. But there are whole bunch of people -- I will be there and watching the lines and talking with the folks and being in the store, but I don't know if I would do it myself.

And then there are people that will come throughout the day. We're gonna be open from midnight all the way through the whole day.

CAVUTO: Could I ask a dumb question? I have asked this of other CEOs, presidents of retail establishments. Do you just rob sales from the future getting them in a little earlier let's say on Thanksgiving?

VITELLI: No, I don't think so.

What we have seen is -- Black Friday is a psychological and physical start to a four-week holiday event for Best Buy and for many retailers. Our teams in our stores prepare for it for weeks and months. We actually start -- when we are done with the season in December, we will start planning for next year in January, what worked, what went well, what didn't go well, what will we do better next time.

So it's a physical and psychological start for our employees and for customers that goes on throughout the entire month of December. So it's a very important day --

(CROSSTALK)

CAVUTO: But obviously you guys are not dummies. You are good at what you do. And obviously you have got these very attractive incentive sales to get going. Methinks that that's a sign that you are either worried about the mood of the consumer. We can talk about this slowdown. We talk about Washington not getting anything done, people pulling in the reins a little bit. Are you worry that this is a disappointing holiday?

VITELLI: Not really. I mean we don't know yet.

I have seen predictions of ranges of what the holiday season is going to do and what Black Friday is going to do that are on both sides of the spectrum. So we don't know. What we do know is the consumer is focusing on value and we are showing that value in some of the deals that we have seen, but those are not unique to the year.

I think, if you went back and looked at what Best Buy has done over the decade...

CAVUTO: So it is not especially acute this year.

VITELLI: It is not especially acute. We were clear about making sure the values were important. We were clear to make sure we were showing products under $99 and under $50. So I think gift giving is alive and well. It's a question of what people are going to be able -- to be able deal with financially. We're gonna make sure we can respond to every one of those needs that people have for themselves or for their loved ones.

CAVUTO: Michael, hope you have a great Thanksgiving.

VITELLI: Thanks. Same to you.

CAVUTO: I guess probably the most difficult four weeks of your year, but best of luck.

VITELLI: And one of the best four weeks of our year.

CAVUTO: Good. Well, that's a good attitude.

CAVUTO: Mike Vitelli, thank you very much.

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