Best Buy gives out gift cards to atone for HD DVD's failing

When Toshiba announced over a month ago that it would cease making and marketing HD DVD players, all the retailers that sold those types of players and associated movies in the HD DVD format had pretty much already announced that they'd started scaling down HD DVD inventory. To early adopter consumers who had already purchased expensive HD DVD players, this was the price of admission: not knowing whether that format or the competing Blu-ray format would win.

HD DVD eventually bit the dust, and for consumers who purchased HD DVD equipment at Best Buy, Inc. (NYSE: BBY), the taste was probably quite sour. As in, "what do I do with this $300 player now?" Following competitor Circuit City Stores, Inc. (NYSE: CC), Best Buy is now helping consumers with the frustration. Instead of giving customers a complete credit for the purchase of an HD DVD player like Circuit City is doing (if purchased in the last 90 days), Best Buy is doing something less interesting but with more oomph -- as in, free $50 gift cards.

This will cost Best Buy an estimated $10 million, and by many accounts it's worth every penny. The move has been classified as "brilliant" from just about every corner I can find. The reason? It will bring foot traffic into stores (that's half the battle of retail) while building loyalty to those consumers that HD DVD left in the cold. In other words "Best Buy cares," in a manner of speaking. And, no action is required; the cards will be mailed out proactively to those customers Best Buy has identified as having purchased an HD DVD player. Talk about a major marketing campaign here. And, from my perspective, this is actually better than just giving a full refund to customers who ask (ala, Circuit City). Again, it seems that Best Buy has an innovative angle here that should continue making it the first destination for consumer electronics purchases among the electronics early adopter crowd.