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Best Buy
Type Public (NYSE: BBY)
Founded 1966
Headquarters Richfield, Minnesota, USA
Burnaby, British Columbia, Canada
Key people Brian J. Dunn, President
Richard M. Schulze, Founder & Chairman
Brad Anderson, CEO & Vice Chairman
Industry Retailing
Products Retailing-Electronics
Revenue US$30.8 billion (2006)
Employees 128,000
Slogan Thousands of Possibilities. Get Yours.
Website http://www.bestbuy.com
Best Buy Co., Inc. (NYSE: BBY) is a Fortune 100 company and the largest
specialty retailer of consumer electronics in the United States and Canada,
accounting for 17% of the market.[1] The company's subsidiaries include Geek
Squad, Magnolia Audio Video, and Future Shop in Canada, which together
operate over 1150 stores in the United States, Canada and China.[2] The
company's corporate headquarters are located in Richfield, Minnesota, USA
(near Minneapolis). On June 26th, 2007, Best Buy announced a 40% increase in
its operations, with plans to operate over 1800 stores worldwide, including
1400 Best Buy stores in the U.S. alone.
Best Buy was named "Company of the Year" by Forbes magazine in 2004,[3]
"Specialty Retailer of the Decade" by Discount Store News in 2001,[4] ranked
in the Top 10 of "America's Most Generous Corporations" by Forbes
magazine,[5] and made Fortune Magazine's List of Most Admired Companies in
2006.[6]
History
1966 -- Richard M. Schulze and business partner James Wheeler open Sound of
Music, an audio specialty store, in Saint Paul, Minnesota.
1967 -- Sound of Music acquires Kencraft Hi-Fi Company and Bergo Company.
Second and third Sound of Music stores are opened near the University of
Minnesota and in downtown Minneapolis. The Sound of Music ends its first
year with gross sales of $173,000.
1969 -- Sound of Music stock first traded as publicly-held company; company
enacts first employee stock option plan; three stores opened in the Twin
Cities area.
1970 -- Sound of Music hits the $1 million mark in annual revenues.
1979 -- Sound of Music becomes the first suppliers of video and laserdisc
equipment including Panasonic, Magnavox, Sony and Sharp.
1981 -- A tornado hits the Roseville, Minnesota store on June 14. Sound of
Music responds with a "Tornado Sale," and it becomes an annual event.
1983 -- Sound of Music’s board of directors approves a new corporate name:
Best Buy Co., Inc.; opens first superstore in Burnsville, Minnesota,
featuring expanded selling space, a wide assortment of discounted brand-name
goods, central service, and warehouse distribution; stores begin selling
appliances and videocassette recorders.
1987 -- Best Buy (symbol BBY) debuts on the New York Stock Exchange with an
offering of 8.3 million shares.
1989 -- Best Buy unveils a new “grab-and-go” store format. Best Buy’s brand
logo changes to the familiar yellow tag.
1995 -- Best Buy develops and implements the Standard Operating Platform
(SOP) to support and manage every aspect of the company’s business; the
Answer Center kiosk is nominated for the Computerworld Smithsonian Award.
1997 -- Best Buy becomes the first national retailer to sell DVD hardware
and software.
1998 -- Best Buy sells its 1-millionth DVD, a year after the DVD’s debut.
The company also begins selling high-definition television.
2000 -- Best Buy enters the online retailing business by launching
Bestbuy.com; Best Buy acquires Magnolia Hi-Fi (renamed Magnolia Audio Video
in 2003), a retailer of high-end consumer electronics; music Compact
Cassettes are removed from most stores.
2001 -- Best Buy acquires the Canada-based electronics-chain Future Shop
Ltd. and marks the company's entrance to the international marketplace; Best
Buy acquires Musicland, a mall -based retailer for music and entertainment
software; Best Buy launches Redline Entertainment, an independent music
label and action-sports video distributor.
2002 -- Brad Anderson succeeds Schulze as Best Buy's CEO; the company
acquires Geek Squad®, a 24-hour computer support taskforce; first Canadian
Best Buy store opens in Mississauga, Ontario west of Toronto.
2003 -- U.S. Best Buy stores surpass the 600 mark; the company opens its
first global sourcing office in Shanghai; Fortune magazine ranks Best Buy #4
on its list of most admired U.S. companies in the specialty retailers
industry; the corporate offices are consolidated in one headquarters campus;
Best Buy divests itself of Musicland; the company begins to segment their
stores, which is considered a major part of the company's "customer
centricity" transformation; the Reward Zone loyalty program and the Sweet
Tracks Christmas music series are both introduced in the U.S.
2004 -- Forbes magazine names Best Buy “Company of the Year.” Geek Squad
precincts are opened in every Best Buy store nationwide, offering in-store
service during store business hours; Best Buy offers Learning Place, its
post-purchase, online customer service center. Best Buy customers purchase
secure access to interactive product user-manuals, live text/voice chat
service and a discussion forum to use, fix and extend the products they buy.
2005 -- Sound & Vision magazine awards Best Buy its first ever "Retailer
Innovation Award" for its Magnolia store within a store concept and other
retail innovations.[[2]]
2006 -- Best Buy acquires a majority interest in the retail chain Jiangsu
Five Star Appliance Co., Ltd. China’s fourth-largest appliance and consumer
electronics retailer. On November 17th, the company signs a 10 year lease to
open a 4-floor store later in 2007 at the former Virgin Megastore on trendy
and upscale Newbury Street in Boston, Massachusetts. In late December, Best
Buy soft-opens its first Best Buy-branded store in Shanghai; an 80,000
square foot location (the largest in the company).[7][8] Best Buy opens its
800th store in Chicago, Illinois.
2007 -- On January 26, 2007 the first Best Buy in China had its grand
opening - touted as the largest Best Buy in existence James Wheeler spoke
for 45 mins for the grand opening. In March, Best Buy announced plans to
purchase Seattle, WA based Speakeasy, Inc., a broadband and VOIP services
provider.[9] The company continues to explore new markets, including current
construction of a store in San Juan, Puerto Rico, and test stores in Mexico
and Turkey.
Business model
Best Buy sells consumer electronics as well as a wide variety of related
merchandise such as computers, computer software, Video games, music, DVDs,
mobile 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 and accidental service
plans.
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.
In April 2005, the company was the first major retailer to announce the
elimination of all mail-in rebates. [10]
As of June 25, 2007, the company operates 852 Best Buy Stores, 19 Magnolia
Audio Video Stores (specializing in high-end electronics), 7 stand-alone
Geek Squad stores, 3 AudioVisions Stores, and 14 Pacific Sales Stores (in
Southern California), all through its U.S. retail subsidiary. They also
operate 47 Best Buy and 122 Future Shop stores throughout Canada.[11] In
2003, the company opened its first international global procurement office
in Shanghai, 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 2007, Best Buy operates one
"branded" store in Shanghai, as well as 131 Five Star Appliance Stores in
China.
With the acquisition of Seattle based Speakeasy, Inc., Best Buy will be able
to offer broadband and VOIP services to small businesses through their Best
Buy for Business unit.[12]
Demographics
Some Best Buy stores like this one in Pinole, California, in the Bay Area
have bilingual English and Spanish signage
Some Best Buy stores like this one in Pinole, California, in the Bay Area
have bilingual English and Spanish signage
Customer Centricity is the name of a business movement centered on catering
to specific customer needs and behaviors.[1] 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.[1]
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 & Vice Chairman Brad Anderson claims that stores
that have already been transformed have doubled their growth rate versus
stores that have yet to be transformed. In 2006, Best Buy continued to
expand on the customer centricity operating model by opening or converting
233 U.S. Best Buy stores to the customer centricity operating model. During
that same year, Best Buy operated 300 segmented stores, or 40% of the U.S.
Best Buy stores.
As of February 25, 2006, it operated 742 U.S. Best Buy stores in 49 states
and the District of Columbia that averaged approximately 41,300 retail
square feet. [13]
Private label brands
As with most retailers, Best Buy owns some of the brands it sells. Best Buy
currently has five private labels which include Insignia, Dynex, Init, Geek
Squad, and Rocketfish. Insignia focuses on electronic equipment, including
televisions, monitors, car stereos, home theater systems, and portable video
and audio players.[14] VPR Matrix (discontinued) focused on personal
computers and accessories including desktops, notebooks and computer
monitors. Dynex focuses on a wide variety of economically priced computer
and entertainment accessories such as storage media, data and power cables,
webcams, and office supplies, with recent forays into basic electronics such
as tube televisions. Init focuses on storage products such as media storage,
equipment bags, totes and furniture for home theaters. The Geek Squad brand
can be found on the company's high end computer accessories and cables.
Rocketfish focuses on high end cables primarily used with home theater
installation and setup.
Corporate sponsorships
Best Buy is the primary sponsor for NASCAR team Haas CNC Racing and their
driver Jeff Green.[15] The company started sponsoring Haas CNC Racing in
2005 as an associate sponsor with their driver Mike Bliss.
Criticism
Connecticut Attorney General Announces Best Buy Fraud Lawsuit
Connecticut State Attorney General Richard Blumenthal orders investigation
into Best Buy's alleged use of an in-store website to mislead customers on
item sales prices. Following a months-long denial, Best Buy admits that an
internal site exists that may or may not have been used by salespeople.[16].
[17]
Xbox 360 and Playstation 3 debut
Best Buy was the subject of media attention on two separate occasions in
late 2005 and again in late 2006 during the release of two popular gaming
consoles: the Xbox 360 and the PlayStation 3. In December 2005, despite any
advertised bundle packages for the Xbox 360, some individual stores required
customers to make a minimum purchase of certain accessories, games and/or
service plans to be able to purchase the console. This resulted in a
corporate-issued apology to customers.[18] In November 2006, Best Buy was in
the headlines again, when an alleged error occurred on the company's website
that allowed customers to pre-order the Playstation 3 console. Customers
were notified by emails explaining that the pre-order was an online error
and has been canceled, and that they would not be charged for the new
console.[19]
Civil Action by Wisconsin Attorney General
In May 2005, the Wisconsin State Attorney General's office filed a civil
action against Best Buy Company, Inc., over several alleged violations of
Wisconsin consumer protection laws. Among the allegations: misleading
representations to Wisconsin customers about rebates, service plans,
supplemental magazine subscriptions, exchange policies, restocking fees,
gift cards, and reward zone points. [20]
2006 'Christmas' controversy
In November 2006, Best Buy announced that it would not use the word
"Christmas" in its 2006 advertisements, which caused public controversy.
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."[21] The
Christian organization American Family Association criticized Bryant's
statement, saying she equated saying "Merry Christmas" with showing
disrespect. Furthermore, the AFA has launched a campaign against Best Buy's
policy.[22] In reaction to the same policy, the Catholic League placed Best
Buy on its 2006 Christmas Watch List.[23]
References
1. ^ a b c Boyle, Matthew. "Best Buy's Giant Gamble." CNN. March 29, 2006.
Retrieved on November 28, 2006.
2. ^ Chris Serres "[http://www.startribune.com/535/story/991027_current_news.html/
Adaptation is key for Best Buy ]." Star Tribune. February 08, 2007.
Retrieved on February 16, 2007.
3. ^ Tatge, Mark. "Fun & Games." Forbes. January 12, 2004. Retrieved on
August 22, 2006.
4. ^ Staff Writer. "DSN honors Best Buy with Specialty Retailer award."
Discount Store News. January 22, 2001. Retrieved on August 22, 2006.
5. ^ Moyer, Liz. "The Most Charitable Companies." Forbes. November 14, 2005.
Retrieved on August 22, 2005.
6. ^ Staff Writer. "America's Most Admired Companies 2006." CNN. Retrieved
on August 22, 2006.
7. ^ 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.
8. ^ 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.
9. ^ Dudash, Jeff."Best Buy Acquires Speakeasy." (press release) Best Buy.
March 27, 2007. Retrieved on March 27, 2007.
10. ^ John Vomhof Jr. "Best Buy starts to eliminate mail-in rebates."
Minneapolis St. Paul Business Journal. January 24, 2006.
11. ^ Staff Writer. "Fiscal Year 2005 Fact Sheet - Q4." Best Buy. February
25, 2006. Retrieved on August 22, 2006.
12. ^ Staff Writer. "Best Buy to buy voice and data services provider.."
Reuters. March 27, 2007
13. ^ "Best Buy Co. Full Description." Reuters. Retrieved on December 1,
2006.
14. ^ Spooner, John G. "Best Buy initiates a battle of the brands." c|net.
October 4, 2004. Retrieved on November 27, 2006.
15. ^ Press Release. "Best Buy on board with Green's No. 66." NASCAR.
January 12, 2006. Retrieved on November 28, 2006.
16. ^ Gombossy, George "Best Buy Confirms It Has Secret Website." Hartford
Courant March 2, 2007. Retrieved on March 3, 2007.
17. ^ AP via cnbc"[1]." CNBC May 27, 2007. Retrieved on May 27, 2007.
18. ^ Dunn, Brian. "Open Letter to Customers." Best Buy. December 6, 2005.
Retrieved on August 30, 2006.
19. ^ "Best Buy rescinds pre-order offer for PlayStation 3." Associated
Press November 13, 2006. Retrieved on November 30, 2006.
20. ^ "Consumer Protection Lawsuit is Filed Against Best Buy." WI Department
of Justice. Retrieved on January 01, 2007.
21. ^ Wal-Mart Opts for 'Christmas' Marketing. Associated Press. November
15, 2006. Retrieved on January 28, 2007.
22. ^ Wildmon, Donald Best Buy Bans Use of Merry Christmas In Advertising .
American Family Association. November 10, 2006. Retrieved on November 10,
2006.
23. ^ "Christmas Watch." Catholic League. Retrieved on November 24, 2006.
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