Best Buy

Best Buy

Infobox_Company
company_name=Best Buy Co., Inc.
company_logo=
company_type=Public (nyse|BBY)
company_slogan=You, Happier.
foundation=1966
location=Richfield, Minnesota
key_people=Richard M. Schulze, Founder & Chairman
Brad Anderson, CEO & Vice Chairman
Bookuy J. Dunn, COO
industry=Retailing
products=Retailing-Electronics
homepage= [http://www.bestbuy.com/ 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 21% of the market.Boyle, Matthew. " [http://money.cnn.com/magazines/fortune/fortune_archive/2006/04/03/8373034/ Best Buy's Giant Gamble] ." "CNN." March 29, 2006. Retrieved on November 28, 2006.] The company's subsidiaries include Geek Squad, Magnolia Audio Video, Pacific Sales, and, in Canada the Best Buy Canada subsidiary operates most stores under the Future Shop label. Together these operate more than 1,150 stores in the United States, Puerto Rico, Canada, China, Mexico and Turkey. [Chris Serres " [http://www.startribune.com/535/story/991027.html Adaptation is key for Best Buy] " "Star Tribune." February 08, 2007. Retrieved on February 16, 2007.] The company's corporate headquarters are located in Richfield, Minnesota, USA (near Minneapolis). On June 26, 2007, Best Buy announced a 40% increase in its operations, with plans to operate more than 1,800 stores worldwide, including 1,400 Best Buy stores in the U.S.

With the recent 50% acquisition of UK-based mobile phone operation The Carphone Warehouse's retail division, Best Buy announced that it would open branded superstores in the UK and other European countries.cite web |url=http://news.bbc.co.uk/1/hi/business/7389291.stm |title= Carphone in £1.1bn US partnership |accessdate=2008-05-28 |publisher=BBC |date=2008-05-08 ] Best Buy will first open stores in the UK beginning 2009, with plans for up to 200 stores eventually, it is also considering purchasing UK rivals Kesa Electricals (owner of Comet), DSG International (owner of Currys), or both. [cite web |url=http://www.forbes.com/markets/feeds/afx/2008/05/11/afx4994500.html |title=Best Buy may make offers for DSG International, Kesa - report |accessdate=2008-05-28 |last=Waller |first=Philip |publisher=Thomson Financial |date=2008-05-11 ] It is unknown whether these stores will rebrand if acquired by Best Buy. Best Buy has revealed the first 4 UK locations which will be in Slough, Staines, Enfield and Thurrock; 20 locations are planned for 2009 which will all be big box format, however the company is looking for a flagship store in Central London in a prominent area such as Piccadilly Circus, Oxford Street or Regent Street. [cite web|url=http://www.pcretailmag.com/news/30216/First-Best-Buy-stores-unveiled|title=First Best Buy stores unveiled|author=Ben Furfie|publisher=PCRetail|date=2008-07-21] [cite web|url=http://www.thisismoney.co.uk/investing-and-markets/article.html?in_article_id=447620&in_page_id=3&position=moretopstories|title=Best Buy aims to shine in UK|author=Robert Lea|publisher=thisismoney.co.uk|date=2008-07-18] See Best Buy UK

Best Buy was named "Company of the Year" by Forbes magazine in 2004, [Tatge, Mark. " [http://www.forbes.com/free_forbes/2004/0112/138.html Fun & Games] ." "Forbes." January 12, 2004. Retrieved on August 22, 2006.] "Specialty Retailer of the Decade" by Discount Store News in 2001, [Staff Writer. " [http://www.findarticles.com/p/articles/mi_m0FNP/is_2_40/ai_70202157 DSN honors Best Buy with Specialty Retailer award] ." "Discount Store News." January 22, 2001. Retrieved on August 22, 2006.] ranked in the Top 10 of "America's Most Generous Corporations" by Forbes magazine, [Moyer, Liz. " [http://www.forbes.com/personalfinance/philanthropy/2005/11/11/charities-corporations-giving-cx_lm_1114charity.html The Most Charitable Companies] ." "Forbes." November 14, 2005. Retrieved on August 22, 2005.] and made Fortune Magazine's List of Most Admired Companies in 2006. [Staff Writer. " [http://money.cnn.com/magazines/fortune/mostadmired/full_list/ America's Most Admired Companies 2006] ." "CNN." Retrieved on August 22, 2006.]

History

*1966 - Richard M. Schulze and business partner James Wheeler open Sound of Music, an audio specialty store, in Saint Paul, Minnesotacite web |url=http://www.fundinguniverse.com/company-histories/Best-Buy-Co-Inc-Company-History.html |title=Best Buy Co., Inc. Company History |accessdate=2008-05-14 |publisher=FundingUniverse.com ] cite web |url=http://www.plainvanillashell.com/archivegrs.asp?id=977 |title=Global Retail Spotlight On: Best Buy Co., Inc. |accessdate=2008-05-15 |last=Stapleton |first=Steve |work=Global Retail Spotlight Archives |publisher=Trade Dimensions International, Inc. ]
*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(USD)
*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 yellow tag
*1990 – Best Buy eliminates commission for standalone sales people, but retains bonuses for management and supervisors
*1992 – Best Buy hits the $1 billion mark in annual revenues
*1997 – Best Buy becomes the first national retailer to sell DVD hardware and software
*2000 – Best Buy enters the online retailing business by launching Bestbuy.com; Best Buy acquires Magnolia Hi-Fi, 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., which marks the company's entrance to the international marketplace; though fully owned by Best Buy, Futureshop remains to this day a separate entity operating independently from Best Buy Canada; 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
*2002Brad 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; 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 is introduced in the U.S.
*2004Geek Squad precincts are opened in every Best Buy store nationwide, offering in-store service during store business hours
*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. [Busch, Sue; Driscoll, Jennifer. " [http://bestbuymedia.tekgroup.com/article_display.cfm?article_id=292 Best Buy to Acquire Majority Interest in Jiangsu Five Star] ." (press release) "Best Buy." May 12, 2006. Retrieved on August 22, 2006.] 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. In March, Best Buy announced plans to purchase Seattle, WA based Speakeasy, Inc., a broadband and VOIP services provider. [Dudash, Jeff. " [http://bestbuymedia.tekgroup.com/article_text/032707%2DNR%2DSpeakeasy%2Epdf Best Buy Acquires Speakeasy] ." (press release) "Best Buy." March 27, 2007. Retrieved on March 27, 2007.] Best Buy becomes the first major retailer to exit the analog television market, carrying only digital products that will be mandatory in February 2009 by the FCC. [MSNBC. " [http://www.msnbc.msn.com/id/21344084/ Best Buy ends sales of analog TVs.] " (press release) "MSNBC" October 17, 2007. Retrieved on November 9, 2007.]

*2007 – Best Buy launches mini-Geek Squad precincts in Office Depots in Orlando, Florida and Denver, Colorida. They also launched mini-Geek Squad precincts in Fedex Kinkos in Indianapolis, Indiana and Charlotte, North Carolina. These test markets and/or relationships with these companies ended in all markets late 2007 early 2008.

*2008 – Best Buy announces the opening of its first pilot stores in Mexico and Turkey. Best Buy decides to promote Blu-ray over HD DVD, a move which ultimately contributed to Toshiba's Corps. decision to drop HD-DVD. [cite web |url=http://www.informationweek.com/news/showArticle.jhtml?articleID=206501687 |title=Best Buy To Recommend Blu-ray Hi-Def Video |accessdate=2008-05-26 |last=Gonsalves |first=Antone |date=2008-02-12 |work=Information Week |publisher=United Business Media ] In May it agreed to buy a 50% holding in UK-based mobile phone operation Carphone Warehouse's retail division, Best Buy also announced that it will open branded superstores in the UK and other European countries. On July 29, Best Buy announced that it will start selling musical instruments and related gear in over 70 of its retail stores, making the company the second largest musical instrument distributor in the US (the largest being Guitar Center). [ [http://www.fretbase.com/fretbase/2008/07/best-buy-to-sel.html Fretbase, Best Buy to Sell Guitars and Gear] ] In early summer, Best Buy announced its addition of Best Buy Mobile to every store. On September 7, Best Buy became the first third party to sell Apple's iPhone, adding it to all Best Buy Mobile stores. [ [http://www.crn.com/retail/210600251 Best Buy Begins Sales Of Apple's 3G iPhone] ] In mid-September Best Buy announced its planned acquisition of Napster for $121 million. [ [http://www.reuters.com/article/mergersNews/idUSN1550308820080915 Best Buy to buy Napster] ]

Business Operations

Best Buy sells consumer electronics as well as a wide variety of related merchandise such as computers, computer software, video games, music, DVDs, Blu-ray discs, mobile phones, digital, car stereos 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 prides itself on the fact that their sales people are not on commission. This however is not entirely true of supervisors, managers and district employees. Managers and supervisors make bonuses based on store performance metrics such as revenue, margin, and net operating profit. Employees record the number of reward zone memberships, credit card applications, and extended warranties they sell to customers. This information is used in the one-year performance review, and the employee's raise can be affected.

Best Buy does not allow expensive gifts from vendors to be given to employees (SPIFFS, etc), nor does it allow employees to collect tips or gifts from customers of any type.

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. [John Vomhof Jr. " [http://www.bizjournals.com/twincities/stories/2006/01/23/daily26.html Best Buy starts to eliminate mail-in rebates] ." "Minneapolis St. Paul Business Journal." January 24, 2006.]

During September 2008, in an effort to eliminate losses from customers who abused the old product replacement plan (PRP), Best Buy changed their warranty system to the Geek Squad Black Tie Gadgets and Gizmos Protection Plan. One notable change under the Gadgets and Gizmo plan is the Xbox 360 exchange policy. Under this new system, Best Buy will not give customers who purchased the extended warranty a brand new Xbox 360 if their system fails after the first 30 days of purchase. Instead, the company sends the customer’s console to a refurbishing site, where a new system is assembled.

As of August 29, 2008, the company operates 962 Best Buy Stores, 13 Magnolia Audio Video Stores (specializing in high-end electronics), 7 stand-alone Geek Squad stores, 3 AudioVisions Stores, 13 Best Buy Mobile Stores (standalone) and 17 Pacific Sales Stores (in Southern California), all through its U.S. retail subsidiary. They also operate 51 Best Buy and 128 Future Shop stores throughout Canada. [Staff Writer. " [http://www.bbycommunications.com/newscenter/FY05_Fact_Sheet_Q4.pdf Fiscal Year 2005 Fact Sheet - Q4] ." "Best Buy." February 25, 2006. Retrieved on August 22, 2006.] 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 151 Five Star Appliance Stores in China.

Best Buy also operates numerous Best Buy Mobile stores within the U.S. as a joint venture with The Carphone Warehouse, using its successful UK business model; 13 of these are stand-alone locations (primarily in Manhattan). Best Buy Mobile locations offer customers a wider variety of cell phones than their other locations, some of which are "unlocked" phones that can be used on any GSM network. Best Buy Mobile also offers services comparable to those from carrier stores, including but not limited to a number transfer machine, warranty service on any phone, loaner phones, and the most popular carriers. Most current Best Buy Mobile stores are located in or near the Northeast region of the U.S., though the company is expanding such that most or all U.S. locations will include Best Buy Mobile services by the end of 2008. [cite web |url=http://bestbuymedia.tekgroup.com/article_display.cfm?article_id=4555 |title=Best Buy, a World-Leading Consumer Electronics Retailer, and The Carphone Warehouse, a World-Leading Independent Mobile Phone Retailer, to Create a New Company |accessdate=2008-05-28 |publisher=Best Buy |date=2008-05-08 ]

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. [Staff Writer. " [http://www.reuters.com/article/mergersNews/idUSWEN580320070327 Best Buy to buy voice and data services provider.] ." "Reuters." March 27, 2007]

The domain "bestbuy.com" attracted at least [http://siteanalytics.compete.com/bestbuy.com?metric=uv 159 million visitors] annually by 2008 according to a Compete.com survey.

Demographics

Customer Centricity is the name of a business movement centered on 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 segmentation, 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.

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.

Private label brands

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.Spooner, John G. " [http://news.com.com/Best+Buy+initiates+a+battle+of+the+brands/2100-1041_3-5392962.html Best Buy initiates a battle of the brands] ." " [http://www.cnet.com/ c|net] ." October 4, 2004. Retrieved on November 27, 2006.] 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 electronics such as high definition LCD 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 as well as on computer accessories. Rocketfish is promoted as a brand that focuses on consumer input to develop its products. Insignia TVs and electronics include parts made by Toshiba, Sylvania, Sharp, Sony, and LG.

Corporate sponsorships

Best Buy was the primary sponsor for NASCAR team Haas CNC Racing and their driver Jeremy Mayfield. The company started sponsoring Haas CNC Racing in 2005 as an associate sponsor with their driver Mike Bliss, later moving to driver Jeff Green.As of 2008, Best Buy will be the primary sponsor of the #19 Dodge Charger driven by Elliott Sadler. This car is owned by Gillett Evernham Motorsports.

Best Buy is also the shirt sponsor for MLS side Chicago Fire.

Criticism and controversy

In 2000, two Florida consumers brought a lawsuit against Best Buy, alleging that the company engaged in fraudulent business practices related to the sale of extended warranties (or, more accurately, service plans). The suit claimed that Best Buy employees had misrepresented the manufacturer's warranty in order to sell the chain's own Product Service/Replacement Plan and that Best Buy had "entered into a corporate wide scheme to institute high-pressure sales techniques involving the extended warranties" and that the retailer used "artificial barriers to discourage consumers who purchased the 'complete extended warranties' from making legitimate claims." [" [http://www.http://www.manhattan-institute.org/html/cjr_3_part2.htm Civil Justice Report 3, continued They're Making a Federal Case out of It. . . In State Court] ." "Manhattan Institute for Policy Research." Retrieved on August 12, 2007.] Best Buy ultimately settled for $200,000, but admitted no wrongdoing. [ " [http://www.cbc.ca/consumers/market/files/money/extended_warranties/bestbuy.html CBC Marketplace: Extended Warranties] " "CBC.ca." Retrieved on August 12, 2007. ]

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. [" [http://www.doj.state.wi.us/news/2005/nr052405_CP.asp Consumer Protection Lawsuit is Filed Against Best Buy] ." "WI Department of Justice." Retrieved on January 01, 2007.] During the approach to the 2006 holiday season, competitor Wal-Mart responding to pressure from conservative Christian groups, made a largely publicized decision to center their holiday marketing strategy around the term Christmas. In response, 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." [ [http://www.msnbc.msn.com/id/15639425/ Wal-Mart Opts for 'Christmas' Marketing] . "Associated Press." November 15, 2006. Retrieved on January 28, 2007.] The American Family Association criticized Bryant's statement and launched a campaign against Best Buy's policy. [Wildmon, Donald [http://www.afa.net/petitions/email/bestbuy_11102006.html Best Buy Bans Use of Merry Christmas In Advertising ] . "American Family Association." November 10, 2006. Retrieved on November 10, 2006.] In reaction to the same policy, the Catholic League placed Best Buy on its 2006 Christmas Watch List. [" [http://www.catholicleague.org/linked%20docs/christmas_watch.htm Christmas Watch] ." "Catholic League." Retrieved on November 24, 2006.] In 2007, Best Buy included the term "Christmas" in some of its marketing materials as well as greetings for Hanukkah and Kwanzaa.

In the spring of 2007, Connecticut State Attorney General Richard Blumenthal ordered an investigation into Best Buy's use of an in-store website alleged to have misled customers on item sales prices. [" [http://www.cnbc.com/id/18846852 Best Buy Accused of Overcharging In-Store Shoppers] " "CNBC" May 27, 2007. Retrieved on May 27, 2007.] In December 2007, the Los Angeles Times reported on the same issue in which some customers claimed they thought they were surfing the internet version of bestbuy.com at a in-store kiosk only to learn that the site reflected in-store prices only. In response, Best Buy spokesperson Sue Busch indicated the in-store kiosks were not intended for price-match purposes and rather a means to navigate in-store availability. Since the initial investigation, a banner was placed on the in-store site to make its customers more aware of the difference. [ [http://www.latimes.com/business/la-fi-lazarus23dec23,1,5748783.column?track=rss Best Buy kiosks not connected to Internet - Los Angeles Times ] ]

In April 2008, the FCC fined Best Buy $280,000 for not alerting customers that the analog TVs they sold wouldn't receive over-the-air stations after the digital transition on February 17, 2009. [cite web |url=http://www.latimes.com/technology/la-fi-tv11apr11,1,152881.story |title=FCC fines retailers over digital TV |accessdate=2008-05-28 |last=Puzzanghera |first=Jim |date=2008-04-11 |publisher=Los Angeles Times ] Best Buy is challenging this ruling by the FCC saying it was and is in compliance with current FCC regulations pertaining to the digital transition.

iPhone 3G

On August 12, 2008 Best Buy announced on their website that they would become the third retailer of Apple's iPhone 3G in the U.S., joining Apple and AT&T. Their "Walk out Working" service will be offered, allowing consumers to have their phones activated and set up inside a Best Buy store. The phones went on sale September 7, 2008 at Best Buy retail locations. Online sales availability for the iPhone 3G is not yet known.

References

External links

* [http://www.bestbuy.com/ Official Website]
* [http://www.bestbuy.ca/ Best Buy Canada]
* [http://www.bestbuycanadaltd.ca/ Best Buy Canada Ltd.]
* [http://www.bestbuyforbusiness.com/ Best Buy for Business]
* [http://www.futureshop.ca/ Future Shop (Canada)]
* [http://www.geeksquad.com/ Geek Squad]
* [http://www.magnoliaav.com/ Magnolia Audio & Video]
* [http://www.bestbuy.com/site/olspage.jsp?id=pcmcat159300050006&type=category]


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