Best Buy loses over £62m in the UK, thought to be reconsidering its big-store business plan
The high cost of establishing itself in the UK has hit US-based electricals/electronics chain Best Buy hard: joint venture partner Carphone Warehouse has announced that the company with the big blue stores lost £62.2m in its first year here, while Carphone Warehouse itself made just over that amount in group profit.
The group points out that by the end of the last financial year Best Buy had only six stores open in the UK, but had spent a lot setting up the infrastructure to support the much larger number in its development plans, and has also spent a lot on marketing and promotional activities to develop awareness of the brand.
The company currently has ten stores open here, with another soon to open in Enfield, but the company has put on hold plans to open up to 80 more stores. There's even the suggestion that it may cut back its 11 huge stores, and examine other store formats.
If stores are closed, the UK won't be the first market in which Best Buy bit the bullet: earlier this year it closed some stores in China and Turkey.
Partner Carphone Warehouse is already busy converting stores into a smaller Wireless World format, and expects to almost quadruple the number of these outlets to 400 by the end of the current financial year; meanwhile in the States Best Buy is also rethinking its business model.
It's expected to reduce the number of 'big-box' stores it has by 10% over the next three to five years while boosting the number of much smaller Best Buy Mobile outlets, and concentrate on the lucrative market for accessories, service subscriptions and content.
Those areas of the market are thought to be worth $420bn in the USA – rather more than the traditional consumer electronics business, at less than $200bn – and the company suggests that offering such services as well as TV, computer and mobile phone hardware could enable it to increase gross profit per transaction six-fold.
It also plans to double its online business, and will add more online-only items, open a 'Marketplace' facility for third-party online sellers, and launch loyalty programs.
Smaller stores are also being tried in the States, with interactive 'experience stations', a smaller number of iPad-toting staff, and touch-screen kiosks using large flatpanel displays. There'll be a greater emphasis on portable devices in all stores, too: almost 1100 Best Buy shops will gain a Tablet Central department in the near future.
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Comments
I went to the new store in Rotherham last week. The store was HUGE, but was full of last years models at not very good prices. I left empty handed and purchased my item online.
Sorry you feel so strongly, but we have to comply with media law - if we left some comments untouched then we would be liable. We don't make the rules, but we have to follow them.
Defamatory comments???
Censorship without reasonable grounds - I have cancelled my subscription.
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Potential customers, like me, visit their site with high hopes, then find that the site rarely has a best buy.
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Not suprised at all with this news,prices are way to high for such a supposed low priced shop.
I'm sure they'd do better with some proper advertising on tv,only seen there adverts in the press and it wasn't that good,only went in to browse and i wont be going again.
I would be a bit upset if they started scaling the stores back. I haven't purchased any hifi items from the store as of yet, but I have encountered some great deals at the Lakeside Store for certain items. I managed to get an Alphason TV Stand at a great price, which was only about £25 more expensive than the online stores and they had LA Noire on PS3 for just £29.99 and 2 for £22 on the latest blu rays.
I saw the Sony BDP S760 for £400 when I just bought one from Play.com for £100 was surprised at their prices as was my son. Have not been back since.
I had high hopes for the best buy store, but they are too expensive on many of there recievers & other items compared to places like richer sounds, it appeared to me that they had some items ( a few tv's ) at very low prices to get people in the door and the rest was over priced and not competetive at all.
I'm struggling to find the appeal as to why I would want to go to their store.
Haven't come up with any reasons as yet as to why I should!
No footfall, no business, no profit, simples
Their online store has a security flaw which accepts only a tiny amount of orders. Most of the cards get rejected. I'm not surprised by this news at all.
Fully agree with Lhc. If they are all like the Bristol store then disappointing to say the least for Hifi.
Not at all suprised, they are way too expensive !
Can't say I'm surprised, visited the bristol store recently, disappointing stock and the prices really weren't that great, bit of a let down.