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Retailers Say PS2 Shortage Won't Crimp Holiday Sales

11/06/2000 02:00:00 AM Eastern

New York-Dealers who burned through their PlayStation2 allotments in hours, minutes and even seconds in the first few days of its debut say they were disappointed rather than surprised by Sony's decision to sharply curtail shipments of the new gaming platform.

Although they're eagerly awaiting fresh supplies-due later this quarter and in January-retailers claim they anticipated the shortfalls and factored them into their fourth-quarter planning, thereby blunting expectations for a holiday home run.

But dashed hopes aside, mass merchants and specialty chains lauded Sony for its evenhanded allocations and said the short burst of PS2 frenzy helped boost October revenue and sales of competing platforms.

At Best Buy, which purportedly received a lion's share of PlayStation2 shipments in proportion to its massive software sell-through, president/chief operating officer Brad Anderson said he had expected the cutbacks but not their scope. "I'm not surprised that PlayStation2 is in short supply," Anderson said, "I'm surprised that Sony cut its shipments in half in November."

According to a spokeswoman, Best Buy had 100 to 300 customers queued up outside each of its nearly 400 stores on the morning of PS2's launch, including about 50 game enthusiasts, on average at each of the stores, who camped out all night. (The console was not available on the retailer's website.) Tickets were handed out to those on line, and by 10 a.m. the chain was sold out systemwide.

"We were one of the few retailers who didn't presell," the spokeswoman said, "because that leads to customer disappointment." She added that Best Buy "will be taking shipments throughout the holiday season," and Anderson noted that "Sony said it hopes to have more in January."

By contrast, specialty toy chain K-B Toys resold 54,000 units prior to last month's launch, sold out in two days, and will "presell them again when we get it," said regional VP of stores Richard Lepore.

Although the 48-hour sales spurt "drove business and improved our fiscal outlook for the month," K-B is downplaying the product in its advertising. "We're not featuring it in our circulars in a big way," Lepore said. "Babbage's, Electronics Boutique [see financial story on p. 6] and the other software chains are preselling through 2001, and there just won't be enough to go around."

Lepore described the chip shortage behind Sony's supply problems as "untimely but real" and expects an abundance of both microprocessors and consoles later next year when the manufacturer goes up against Microsoft's much-anticipated X-Box platform. "They'll make sure they'll have enough then," he said.

Tight supplies were "no surprise" to Kmart either, said a spokeswoman, who stated that the platform "did not play a significant role in our fourth-quarter planning."

While the stores experienced "very strong sell-through," she said, and are likely wiped clean of inventory, the discounter's online incarnation-BlueLight.com-is taking a totally different approach to PS2.

The e-commerce site, which relaunched last week with a new look and some 200,000 additional SKUs, is holding on to its allocation until Nov. 7, when it will make the consoles available in "special promotional packages" only.

The bundles will include software, an additional controller, DVDs and other extras, and will sell for less than $500.

"The people who went online first to buy PlayStation2 were the early adopters," a BlueLight spokesman explained. "You saw the frenzy, but they only bought PlayStation2s. Instead, we're targeting moms, and we want them to buy other items as well."

After BlueLight exhausts its stock, the site will invite cyber shoppers to back-order the product while recommending such alternative selections as Sega, the previous PlayStation edition and Color Game Boy-all of which should be the biggest beneficiaries of the PS2 shortage, retailers predicted.

Joe Ettore, president/CEO of Ames Department Stores, the regional discount chain, sees another positive coming out of the PlayStation saga.

"We're all getting quotas and selling out faster than we can get them in," he said. "But sometimes not having that one hot item can be a blessing in disguise because its causes customers to shop the entire department."

"And I'll say this about Sony," Ettore added. "Whenever something is put on allocation, we're usually the last ones to get it. But this time," he chuckled, "Sony screwed everybody equally."

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