Best Buy

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For the defunct chain of catalog showrooms see: Best Products.

Best Buy Co., Inc.
Type	Public (NYSE: BBY)
Founded	1966
Headquarters	Richfield, Minnesota, USA
Key people	Brad Anderson, CEO & Vice Chairman Richard M. Schulze, Founder & Chairman
Industry	Retail
Products	Retail-Electronics
Revenue	US$30.8 billion
Employees	125,000
Slogan	Thousands of Possibilities. Get Yours.
Website	http://www.bestbuy.com

Best Buy is sometimes called the "big blue box" because of the prominent design on Best Buy stores resembling a blue box. This store is located in East Palo Alto, California.

Best Buy Co., Inc. (NYSE: BBY) is a Fortune 100 company and the largest specialty retailer of consumer electronics, personal computers and related goods in North America. The company's subsidiaries include Geek Squad, Magnolia Audio Video, and Future Shop in Canada, which together operate over 1100 stores in the United States and Canada. The company's corporate headquarters are located in Richfield, Minnesota, USA (near Minneapolis).

Best Buy was named "Company of the Year" by Forbes magazine in 2004,^[1], "Specialty Retailer of the Decade" by Discount Store News in 2001,^[2] ranked in the Top 10 of "America's Most Generous Corporations" by Forbes magazine,^[3], and made Fortune Magazine's List of Most Admired Companies in 2006.^[4]

[edit] History

In 1966, Richard M. Schulze opened Sound of Music, an audio specialty store, in St. Paul, Minnesota. The company grew over the following years, expanding to nine locations by 1980. In 1981, Schulze's most successful store was destroyed by a tornado. This event resulted in a highly successful sale that combined a large selection with low prices and heavy advertising. Similar "Tornado Sales" became an annual Sound of Music event. This was the predecessor to today's typical Best Buy store, with large quantities of product, recognizable staff in polo shirts, and lots of marketing.

In 1983, the company's name was changed to Best Buy Co. Inc., and the store shifted its focus to consumer electronics. Over the following decades, the company continued to evolve and grow.

On November 4, 2001, Best Buy purchased Future Shop, a similar retailer which operated in Canada. Best Buy continued to operate existing and trusted Future Shop locations while adding new Canadian stores under the Best Buy branding.

In 2002, Brad Anderson succeeded Schulze as Best Buy's CEO. The company also acquired Geek Squad®, a 24-hour computer support taskforce which borrows imagery from NASA (reference Apollo 13 uniforms) for its employees, which they refer to as "Agents". Their uniforms are starched white short-sleeved dress shirts, black pants, dress shoes and a (clip-on) black tie, and senior Agents also wear a badge on their belt. The secret-agent imagery even extends into the store, where their area is referred to as the "Precinct". The Geek Squad, founded by Robert Stephens in 1994, offers around the clock technical support on any computer problem at flat rate prices. Their clients include celebrities such as Larry King, The Rolling Stones, Ice Cube, and Cindy Margolis. In 2004, Geek Squad put precincts in every Best Buy store, nationwide, offering in-store service during store business hours in addition to 24/7 in-home services, known by the famous police-colored Volkswagen.

In 2003, Best Buy began to segment their stores, which is considered a major part of the company's "customer centricity" transformation. Customer Centricity is an attempt to attract longer-term repeat business by focusing on customer loyalty, and on needs that are unique to individual areas (called "segments"). This means a focus on attracting repeat visits from existing customers as well as gaining new ones. As part of the change, Best Buy no longer refers to their employees as "Product Specialists," but as "Customer Specialists." While many are well educated about the product they sell, employees are trained to give excellent customer service by asking "lifestyle questions" to determine the most suitable product, services, and accessories for the customer, in an attempt to give the customer the "complete solution" out the door.

In 2006, Best Buy acquired a majority interest in the retail chain Jiangsu Five Star Appliance Co., Ltd. China’s fourth-largest appliance and consumer electronics retailer. Best Buy announced that it plans to open its first Best Buy-branded store in Shanghai.^[5][6]

[edit] Business Model

Best Buy Store in Edmonton, Alberta.

Best Buy sells consumer electronics as well as a wide variety of related merchandise such as computers, software, video games, music, DVDs, cellular phones, digital and video cameras, as well as home appliances (washing machines, dryers, and refrigerators), in a non-commissioned sales environment. Each store also includes a department for A/V equipment for automobiles, offering on-site installation services, as well as a Geek Squad "precinct" for computer repair and warranty service.

Best Buy building exteriors are usually light brown in color with the entrance in an area designed to look like a blue box emerging from the rest of the structure. Older stores have a more utilitarian brick building without the blue structure.

As of February 25, 2006, the company operates 742 Best Buy Stores, 20 Magnolia Audio Video Stores (specializing in high-end electronics), and 12 stand-alone Geek Squad operations through its U.S. retail subsidiary. They also operate 44 Best Buy and 118 Future Shop stores, as well as 5 stand-alone Geek Squad operations in Canada.^[7] In 2003, the company opened its first international global procurement office in Shanghai, China, and also operates sourcing offices in Beijing and Shenzhen, primarily to reduce costs and increase the speed to market by purchasing products directly from manufacturers. As of 2006, they are also in the process of opening lab stores in China to open an avenue to the Asian market.

[edit] Customer Centricity

Customer Centricity is the name of a business movement centered around catering to specific customer needs and behaviors. Best Buy's concept of customer centricity means configuring its stores to serve the needs of the particular customer segments that predominate in the area of that store. Some of the ways that the Best Buy company transforms its stores for a customer segment, is using different types of store signage, fixtures, lighting and even uniforms. One of the things the company has done for some segments is to create a personal shopping assistant, so that a customer can call and make an appointment for their shopping trip. [2]

Instore display showing a high def video camera vs a SD camera.

The company has created "lab stores" (separate from regular segmented stores) to test the area's acceptance to the theme and segment products and services. While the renovation of its stores is expensive, sometimes nearing $1 million per store, CEO Brad Anderson claims that stores that have already been transformed have doubled their growth rate versus stores that have yet to be transformed. As of September 2005, only about 120 Best Buy stores have been segmented. Lately, ongoing transformation has become focused less on segmenting individual stores towards a singular, targeted customer segment and more towards offering parts of each segment within every store.

[edit] Company Brands

As with most retailers, Best Buy owns some of the brands it sells. Best Buy has five private labels which include Insignia, VPR Matrix, Dynex, Init, Geek Squad, and its newest addition Rocket Fish (currently only available in a few launch stores). Insignia focuses on actual electronic equipment, including televisions, monitors, car stereos, home theatre systems, and portable audio players. VPR Matrix (Discontinued) focused on personal computers and accessories including desktops, notebooks and computer monitors. Dynex focuses on a wide variety of computer and entertainment accessories such as storage media, data and power cables and office supplies. Rocket Fish focuses on cables primarily used with home theater installation and setup. Best Buy avoids using the "Best Buy" name on these products to avoid the typical negative connotations of buying a store brand, and uses more than one brand name to give a greater sense of selection. By providing private label items, Best Buy can provide products at much lower prices than brand-name manufacturers, and gain more profit, while often retaining good quality products. [3]

[edit] Criticisms

Best Buy has also received criticism from investors and customers due to its high employee turnover rate of 69% vs retail industry averages of 44%-50%. Due to this high turnover rate combined with lax certification standards, customers have complained of a perceived lack of associate experience and competence, especially at in-store Geek Squad locations.^[8][9]

Best Buy received major media attention that involved the release of the Xbox 360, where despite the lack of official bundle packages mandated by the company's main offices, some individual store managers took it upon themselves to require customers to purchase games, accessories and/or service plans if they wished to acquire a console. Soon after, however, this was ameliorated by the company-wide issuance of a suspension of the regular terms of the return policy, including those on opened video game software, for any customer who had purchased an Xbox 360 in November, 2005. ^[10]

Best Buy also received media attention in early November 2006 when it decided not to honor internet pre-orders it had taken for the Sony Playstation 3. Best Buy sent out an email to customers saying, "Thank you for your recent visit to BestBuy.com. Unfortunately, your pre-order for the PlayStation 3 gaming system will be cancelled. Our system was not intended to take pre-orders on the PlayStation 3 gaming system. BestBuy.com will not be taking pre-orders for this item. Your pre-order will be cancelled and you will not be charged.", In a press release, the company stated, "It was recently discovered that an errant posting of the PlayStation 3 gaming system on BestBuy.com prior to its release date, resulted in allowing our system to take pre-orders for the new gaming console, even though that was not our intention. Best Buy is not taking pre-orders for this item. Customers were notified by email explaining that the pre-order was canceled and they will not be charged for the new console. We have expressed our apologies to those customers affected and have offered a $10 digital coupon for any inconvenience." [4] Best Buy received additional attention during the in-store release of the Playstation 3 when a riot broke out among those waiting in line to purchase the system. ^[11]

[edit] No-Christmas Policy

Best Buy does not use the word "Christmas" in any of its 2006 advertising. Dawn Bryant, a Best Buy spokeswoman, stated: "We are going to continue to use the term holiday because there are several holidays throughout that time period, and we certainly need to be respectful of all of them." ^[12]

Drawing on Bryant's statement, the American Family Association concluded that "Best Buy considers the use of "Merry Christmas" to be disrespectful." The AFA has launched an email campaign against Best Buy's no-Christmas policy. ^[13]

[edit] Racing

Best Buy is the primary sponsor for NASCAR team Haas CNC Racing and their driver Jeff Green. Best Buy started sponsoring Haas CNC Racing in 2005 as associate sponsor with their driver Mike Bliss.

[edit] Further reading

• "Best Buy's Giant Gamble" by Matthew Boyle, Fortune Magazine, March 23, 2006, retrieved March 24, 2006.

[edit] References

1. ^ Tatge, Mark. "Fun & Games." Forbes. January 12, 2004. Retrieved on August 22, 2006.
2. ^ Staff Writer. "DSN honors Best Buy with Specialty Retailer award." Discount Store News. January 22, 2001. Retrieved on August 22, 2006.
3. ^ Moyer, Liz. "The Most Charitable Companies." Forbes. November 14, 2005. Retrieved on August 22, 2005.
4. ^ Staff Writer. "America's Most Admired Companies 2006." CNN. Retrieved on August 22, 2006.
5. ^ Busch, Sue; Driscoll, Jennifer. "Best Buy to Acquire Majority Interest in Jiangsu Five Star." (press release) Best Buy. May 12, 2006. Retrieved on August 22, 2006.
6. ^ Busch, Sue. "Best Buy to Open First Store in China; Will Locate in Shanghai's Premier Shopping District." Best Buy. April 1, 2006. Retrieved on August 22, 2006.
7. ^ Staff Writer. "Fiscal Year 2005 Fact Sheet - Q4." Best Buy. February 25, 2006. Retrieved on August 22, 2006.
8. ^ Boyle, Mathew.. "[1]." CNN. March 29, 2006. Retrieved on November 6, 2006.
9. ^ "Job Openings and Labor Turnover." US Bureau of Labor Statistics. August, 2006. Retrieved on November 6, 2006.
10. ^ Dunn, Brian. "Open Letter to Customers." Best Buy. December 6, 2005. Retrieved on August 30, 2006.
11. ^ Riot at Local Best Buy Gets National Attention. CBS. November 17, 2006. Retrieved on November 19, 2006.
12. ^ D'Innocenzio, Anne Christmas Returns to Wal-Mart Marketing. Associated Press. November 9, 2006. Retrieved on November 9, 2006.
13. ^ Wildmon, Donald Best Buy Bans Use of Merry Christmas In Advertising . American Family Association. November 10, 2006. Retrieved on November 10, 2006.

[edit] External links

• Best Buy Main Site — Best Buy's main website, products can be viewed and purchased online.
• Best Buy Canada — Best Buy's primary presence in Canada.
• Future Shop Canada — Canadian subsidiary of Best Buy with similar products to a standard Best Buy.
• Geek Squad — Best Buy's computer support task force with precincts located in all Best Buys and some stand-alone stores
• Magnolia Audio Video — Subsidiary of Best Buy focusing on ultra-high-end home theatre equipment. Stand-alone stores as well as mini-stores within high-performing Best Buys.
• Best Buy for Business — Best Buy's division to cater to the unique needs of businesses.
• Imagelab — Best Buy's imagelab website.
• Best Buy Philanthropy — Best Buy donates 1.5% of its profits to charity. This is the home of Best Buy for Children and other charity programs.