‘These offers are just so hot!’: Dick Smith staff encouraged to snap up bargains in sale

STAFF who “hoarded bargains” were encouraged by Dick Smith to snap up as much they could, leaving customers empty-handed.

DICK Smith staff were encouraged to purchase items from its controversial fire sale, a leaked email shows, despite the company’s claims to the contrary.

Many shoppers were furious last week and over the weekend when they turned up to Dick Smith stores for the much-hyped “mammoth clearance”, lured with promises of up to 70 per cent discounts on TVs, only to find largely outdated and private label products on sale.

Many accused Dick Smith staff of “hoarding” sought-after items. Matthew White complained of the behaviour at Victoria’s Chadstone store. “Think this should be called Staff & Friends Dick Smith Sale,” he wrote. “Not mammoth sale. Mammoth PR disaster.”

In a statement to news.com.au on Monday, the company said it “does not allow its staff to hold back or reserve any discounted product before it is available to the general public”.

“Dick Smith takes any allegations of this occurrence very seriously and is investigating the allegation further, in addition to reinforcing our existing policy with all staff members,” a spokeswoman said.

A similar statement was given to the numerous customers who took the Dick Smith’s Facebook page to complain. But according to an internal email sent last Tuesday, obtained by news.com.au, the company was only too happy to have staff snap up the bargains.

“Hi Team, as we near the end of Clearance Day 1 it’s clear to see store teams have put an enormous amount of passion and energy towards execution and customer engagement,” national operations support manager Jason Woodland wrote.

“As we approach the next couple of days with more categories joining the clearance activity, we are removing the rule we set yesterday regarding staff purchases this week. Effective immediately (yes today) staff are able to buy clearance lines at the reduced price now reflected on the POS.

“No further discounts apply because these offers are just so hot! Happy Shopping!”

An email reveals that Dick Smith encouraged its staff to snap up the bargains during its fire sale. Picture: AAP Image/Joel Carrett

One store manager told news.com.au staff had been effectively thrown under the bus by management appearing to distance itself from staff sales.

“Customers are ripping into us for this clearance sale,” he said. “Everyone is hating on staff for buying things from the sale but we were allowed to. Staff are people too.”

While virtually every retailer has a family and friends policy, the error Dick Smith made was “they didn’t just come out at the start and say, ‘You bet, we look after our staff’,” one industry veteran said.

“Everybody does this — they don’t care who buys it. But this is goodwill they can’t really afford to burn. You don’t get a lot of opportunities to disappoint people. The reason Dick Smith is in this situation is their consumers were underwhelmed. Doubling up on that is not good.”

Dick Smith says it stands by its statement on Monday as factually correct and denies it misled customers.

“We are pleased with the behaviour of our 3300 staff in following these procedures. Once the sale was underway and product was readily available to customers, staff were then able to participate in the sale. Isolated incidents where the procedure was not followed are being investigated and dealt with as appropriate.

“This is a very significant sale and Dick Smith’s customers can be assured of a wide range of attractive bargains when they visit our stores in the coming weeks,” a spokeswoman said.

Following media reports over the past week, including where customers have allegedly overheard staff speaking to each other of sale items they had squirreled away in the back room, the company sent another missive to its employees.

The email read: “Recent media reports have pointed to alleged poor behaviour in our stores which indicated some of our staff may have have been reserving stock for purchase prior to the product being available to our customers. We have followed up on a number of instances brought to our attention and are pleased to say that staff had not being ‘hoarding’ this product as had been suggested.

“To allay any perception of stock being reserved for staff, it is also important to be mindful of the conversations we are having on the shop floor and take the opportunity to affirm with our customers that all available stock is in play for their purchase.”

Adam Kilgour, managing director of corporate affairs firm Diplomacy, said if Dick Smith was “trying to have a conversation with shareholders and the market to reassure them [their] sales strategy is the right one, they’ve probably picked the wrong conversation to have”.

“The sales were basically on fringe brand items and it wasn’t a genuine sale,” he said. “But from a PR point of view it flushed out all their competitors to tell the story for them, with Gerry Harvey and all sorts of people running down the sale publicly.”

Dick Smith kicked off the sale on the same day it was announced the retailer would drop out of the list of Australia’s top 200 companies in the ASX 200 index’s quarterly reshuffle. It followed a nosedive in Dick Smith’s share price earlier that week following two profit downgrades and a $60 million writedown in the value of its inventory.

According to Deutsche Bank analysts Michael Simotas and Daniel Wan, the “vast majority” of discounting was on out-of-date and private label product, while discounts on branded hardware were “aggressive but not too extraordinary”.

On Friday, IG Markets analyst Angus Nicholson described the fire sale as an “act of desperation” that would kick off a damaging price war, forcing JB Hi-Fi and Harvey Norman to drop their prices to compete during a period when most retailers made one third of their annual revenue.

“Once you’re doing 70 per cent markdowns you’re making a loss, nowhere near breaking even at all, you’re just trying to get it out the door,” he said. “It’s going to be really damaging to other stocks in the sector and going to hurt next year [in their profits].”

Mr Nicholson said it demonstrated how failures at one company could bleed into the rest of the sector. “It’s a disaster for [JB Hi-Fi and Harvey Norman] who are suffering from Dick Smith’s mismanagement,” he said.

Rival retailer Gerry Harvey had earlier described the fire sale as “suicidal”.

“That will only make it so much worse for them,” Mr Harvey told The Australian. “They are not making any money if they sell everything in a fire sale. They will lose a lot of money. Why would they do that — that’s committing suicide.’’

On Tuesday, Dick Smith shares closed down 8 per cent, at 33.5 cents. The retailer listed on the share market for $2.20 a share two years ago, raising $345 million after private equity firm Anchorage bought it from Woolworths for $20 million in 2012.

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