Over the holiday shopping season, Walmart ran a promotion on its Facebook page that offered the new iPhone 5 for $150. That savings of $50 reportedly led Best Buy to lose about $65,000 in profit on the same day the sale was launched, as the big box electronics retailer was forced to match the lower price as part of its price matching guarantee.
In retaliation, Best Buy has gone to the attorneys general in several states with accusations that Walmart had false pricing and misleading advertising. Best Buy claims that Walmart ran this promotion on the iPhone 5, despite not having adequate supply of the handset to match consumer demand. Walmart says that its stores were 98 percent in stock of the iPhone when the sale launched.
Best Buy also made false advertising claims against Walmart in regards to a Dell laptop ad it ran, although the massive retail chain has denied these allegations. The unfortunate reality is that both stores like Walmart and online retailers like Amazon are a massive threat to Best Buy, which has seen declining revenues and been forced to lower it margins over the past few years to attract consumers.