Best Buy

Best Buy Co., Inc.

Type	Public (NYSE: BBY)
Industry	Retail
Founded	1966 as Sound of Music 1983 as Best Buy
Headquarters	Richfield, Minnesota, U.S.
Key people	Richard M. Schulze, Founder Brad Anderson, Vice Chairman Brian J. Dunn, CEO
Products	Consumer electronics
Revenue	US$ 49.694 billion (2010)
Operating income	US$ 2.235 billion (2010)
Net income	US$ 1.317 billion (2010)
Total assets	US$ 18.302 billion (2010)
Total equity	US$ 6.320 billion (financials for fiscal 2010)[1] (2010)
Employees	180,000 (2010)
Subsidiaries	Future Shop Geek Squad Magnolia Napster Speakeasy
Website	bestbuy.com

Best Buy Co., Inc. (NYSE: BBY) is a specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Mexico, Canada, China, Turkey and the United Kingdom.^[2] The company's subsidiaries include Geek Squad, Magnolia Audio Video, Pacific Sales, and, in Canada operates under both the Best Buy and Future Shop label. Together these operate more than 1,150 stores in the United States, Puerto Rico, Canada, China,^[3] Mexico, and Turkey.^[4] The company's corporate headquarters are located in Richfield, Minnesota.

With the 50% acquisition of UK-based mobile phone operation The Carphone Warehouse's retail division in the second quarter of 2008, Best Buy announced that it would open branded superstores in the UK and other European countries.^[5] Best Buy will first open stores in the UK, with plans for up to 200 stores eventually, although the initiative has been delayed until the second quarter of 2010 by the state of the retail market.^[6] It is also considering purchasing UK rivals Kesa Electricals (owner of Comet), DSG International (owner of Currys and PC World), or both.^[7] It is unknown whether these stores will rebrand if acquired by Best Buy. The first two Best Buy stores in the UK will open at The Junction retail park near Lakeside Shopping Centre in Thurrock Essex, and near Southampton at Prupim’s Hedge End Retail Park.^[8] A 10-year lease has been signed for the Lakeside store with 55,000 square foot of retail space, while the Southampton store will cover 35,000 square foot. In total 20 locations were 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.^[9][10] There is also a store opening at the Merry Hill Centre in Brierley Hill, West Midlands.^[11] The company announced plans to open a fourth outlet at Aintree Retail Park in Liverpool by spring and a fifth in Croydon by autumn 2010

Best Buy was named "Company of the Year" by Forbes magazine in 2004,^[12] "Specialty Retailer of the Decade" by Discount Store News in 2001,^[13] ranked in the Top 10 of "America's Most Generous Corporations" by Forbes magazine in 2005 (based on 2004 giving),^[14] and made Fortune magazine's List of Most Admired Companies in 2006.^[15]

On March 9, 2009, Best Buy became the primary electronics retail store (online and bricks and mortar) in the eastern United States, after smaller rival Circuit City went out of business. Fry's Electronics remains a major competitor in the western United States. Many locations feature in-store pickup, which can be arranged through the company's website.^[16]

History

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

Best Buy #5, Edina, Minnesota: this was the fifth store ever constructed and retains the small size, old logos, and signage (including "Best Buy Co." and "Best Buy Superstore"); this location originally was a "Sound of Music". Older stores have been demolished or completely renovated.

• 1966 – Richard M. Schulze and business partner James Wheeler open Sound of Music, an audio specialty store, in Saint Paul, Minnesota^[17][18]
• 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," (with the sale promoted as a "Best Buy") and it becomes an annual event
• 1983 – Sound of Music’s board of directors approves a new corporate name: Best Buy Co., Inc.;^[17] 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
• 1985 – Best Buy (symbol BBY) debuts on the New York Stock Exchange^[17] with an offering of 8.3 million shares
• 1987 – Best Buy’s brand logo changes to the yellow tag
• 1989 – Best Buy unveils a new “grab-and-go” store format
• 1990 – Best Buy eliminates commissions for standalone sales people, but retains bonuses for management and supervisors
• 1992 – Best Buy hits the $1 billion mark in annual revenues
• 1994 – Best Buy expands to the Maryland and Virginia markets
• 1997 – Best Buy becomes the first national retailer to sell DVD hardware and software.
• 1998 – Best Buy sponsors Stevie Nicks Enchanted Tour
• 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;^[17] music Compact Cassettes are removed from most stores

Future Shop store in Halifax, Canada

Best Buy Store located in Shanghai, China

This Best Buy logo has appeared at select stores. Its replacement status remains unknown.

• 2001 – Best Buy acquires the Canada-based electronics-chain Future Shop Ltd.,^[17] which marks the company's entrance to the international marketplace;^[18] though fully owned by Best Buy, Futureshop remains to this day a separate entity operating independently from Best Buy Canada; Best Buy acquires Musicland,^[17] 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 Markham, Ontario
• 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;^[17] 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.
• 2004 – Virtucom Group of Syracuse, New York is hired to handle all online content for Best Buy which generates over $3 billion per year in revenues.
• 2004 – Geek 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 chain.^[19]

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.^[20] Best Buy becomes the first major retailer to exit the analog television market, carrying only digital products that became mandatory in June 2009 by the FCC.^[21]
• 2007 – Best Buy launches mini-Geek Squad precincts in Office Depots in Orlando, Florida and Denver, Colorado. 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 opens 1,000th physical store on October 24, this store located within the Mall of America in Bloomington, Minnesota opened in August 2008.
• 2008 – Best Buy announces the opening of its first pilot stores in Puerto Rico,^[22] and Mexico, as well as another store in Shanghai. Best Buy decides to promote Blu-ray over HD-DVD, a move which ultimately contributed to Toshiba's Corps. decision to drop HD-DVD.^[23] 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 80 of its retail stores, making the company the second largest musical instrument distributor in the US (the largest being Guitar Center).^[24] 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.^[25] In mid-September, Best Buy announced its planned acquisition of Napster for $121 million.^[26] A different Best Buy logo began to appear in some stores and in some company websites. This logo has a tag with yellow outline. The "Best Buy" text is outside the tag. It is unclear if this logo will replace the current one.^[27][28]
• 2009 – Best Buy Canada in Partnership with Carphone warehouse opens a Best Buy Mobile "Store Within a Store" at all Best Buy locations.^[29] During October 2009, the website BestBuy.com had a facelift. The font used in the site was changed to the font seen in the alternative logo that appeared in 2008. In November, Best Buy announced plans to team with Roxio CinemaNow to launch an on-demand movie download service that will allow customers to pipe Hollywood hits into any device sold by Best Buy that connects to the internet. This currently unnamed service is expected to be available in early 2010. Once available, consumers will be able to buy or view more than 20,000 of CinemaNow's movie and television titles.^[30] On 19 December, the first Best Buy in Turkey opened in İzmir.^[31]
• 2010 Best Buy opens its first UK store in Thurrock, Essex. New locations have already been announced in Aintree in Liverpool, Hedge End in Southampton and Merry Hill, Dudley. Coinciding with their first store launch, Best Buy also launched their Customer engagement program for UK called as My Best Buy. In June 2010, Best Buy and Best Buy Mobile announced the launch of Best Buy Connect, a new mobile broadband service.

Business operations

Best Buy Corporate Headquarters is located in Richfield, Minnesota, a suburb of Minneapolis.

Best Buy Store in Edmonton, Canada

Best Buy in Durham, North Carolina

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 camera, 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 audio/visual 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.

Many Best Buy employees, especially at the corporate level, are under a policy of Results Only Work Environment. This model is increasingly being integrated at the store level.^[32]

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.^[33]

In March 2008, select stores began to offer auto detailing services, primarily in Ohio & Michigan.^[34]

During September 2008, partially in an effort to eliminate losses from customers who abused their Product Replacement Plan, an expanded warranty for smaller electronics, Best Buy changed their product guarantee system to Geek Squad Black Tie Gadgets and Gizmos. One notable change under the Gadgets and Gizmos plan is the gaming console exchange policy. Under this new system, the company sends the customer’s console to a refurbishing site if a hardware failure occurs after 30 days, instead of replacing it with a new one. The title "Gadgets and Gizmos" has since been eliminated, without change to the service procedures.

At the same time the Product Replacement Plan was changed, the company modified its Performance Service Plan, offered on many bigger ticket items, to a system called Geek Squad Black Tie Protection. The new service strategy includes variable levels of coverage. The standard-level plan operates similarly to the previous system, while new premium-level plans include extra services like limited free telephone troubleshooting, multi-year Geek Squad anti-virus/spyware protection, HDTV calibration, preventative maintenance checks on major appliances, and prioritization of service claims. Additionally, customers who purchase Geek Squad Black Tie Protection can claim points that, when accumulated on a Best Buy RewardZone account, can be used toward future purchases from the store or online.

As of December 28, 2008 (2008 -12-28)^[update], the company operated 1,010 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, Arizona, and Nevada), all through its U.S. retail subsidiary. They also operate 51 Best Buy and 140 Future Shop stores throughout Canada.^[35] 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 January 2009^[update], Best Buy operated five^[36] "branded" stores in Shanghai, one "premium" store in Beijing, as well as 151 Five Star Appliance Stores in China.

Best Buy Express vending machine at Hartsfield–Jackson Atlanta International Airport

Best Buy 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.^[37]

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.^[38]

The domain bestbuy.com attracted at least 159 million visitors annually by 2008 according to a Compete.com survey.

On February 15, 2009, Best Buy started an electronics recycling program.^[39]

On Late August 2010, Best Buy launched Video Game Trade-Ins and was now buying used video games, just like GameStop. The Game Trade-Ins was located over 600 Best Buy Stores in the U.S. The company will start Sunday, August 29th.

Demographics

Customer Centricity is the name of a former business movement centered on catering to specific customer needs and behaviors.^[2] Best Buy's concept of customer centricity was configuring its stores to serve the needs of the particular customer segments that predominated in the area of each store. Some of the ways that the Best Buy company transformed its stores for a customer segmentation were using different types of store signage, fixtures, lighting and even uniforms. One of the things the company did for some segments was to create a personal shopping assistant, so that a customer could call and make an appointment for their shopping trip.^[2]

Best Buy exclusive brands

• Insignia - Focuses on discount electronic equipment, including HDTVs, blu-ray players, home theater systems, digital imaging, and GPS.
• Dynex - Focuses on computer and entertainment accessories such as storage media, data and power cables, webcams, and office supplies. Dynex is also their lower-end house brand for HDTV's and DVD players, while Insignia has been upgraded to compete with more known brand names.
• Init - Focuses on storage products such as media storage, equipment bags, totes and furniture for home theaters.
• Geek Squad - Focuses on repairing old computers and setting up new computers with various software and hardware upgrades. They also focus on high end computer cables and accessories.
• RocketFish - Focuses on high end cables primarily used with home theater installation and setup as well as on computer and gaming accessories.
• RocketFish Gaming - Gaming Division of RocketFish
• RocketFish Mobile - Focuses on quality cases, gel skins, clips and chargers for cell phones, GPS, and other select products.
• Platinum Cases - Focuses on quality cases and belt clips for BlackBerry and Android Cell Phones.
• vpr Matrix (discontinued) - Focused on personal computers and accessories including desktops, notebooks and computer monitors.

Corporate sponsorships

• Best Buy sponsors the Minnesota Twins, Chicago White Sox, Boston Red Sox, Los Angeles Angels, Los Angeles Dodgers, Atlanta Braves, and Houston Astros of Major League Baseball.
• Best Buy is also the shirt sponsor for MLS team Chicago Fire.
• Best Buy sponsors the Richard Petty Motorsports #43 Ford Fusion driven by A. J. Allmendinger in the NASCAR Sprint Cup Series.
• Best Buy sponsors the Vancouver Canucks of the National Hockey League which also include a high scale box called the Best Buy Club.

Expansion plans

In early 2009 Best Buy announced major plans to expand the company not only in the US but the UK, China and other emerging markets as well. Best Buy currently operates just over 1000 stores in the US and has pledged more than 500 more, most to take the place of the old Circuit City buildings. During this expansion Best Buy will also launch dozens more Geek Squad and Best Buy Mobile stand alone stores in prevailing markets. The company has experimented with Magnolia Home Theatre stand alone stores in demographics just outside New York City, Chicago, Dallas, and Orlando, the stores have taken in more than $300 million dollars in the first year of operation combined. With the fall of Circuit City nearly 10% of the market place was up for grabs with Best Buy snatching most of it but not without Walmart far behind.

Best Buy's Sales to Customers by Geographical Regions in 2009^[40]

Criticism and controversy

Warranty 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."^[41] Best Buy ultimately settled for $200,000, but admitted no wrongdoing.^[42] In 2009, a class action lawsuit was launched against Best Buy. The lawsuit addressed the same issue. Several consumers were outraged by the sales tactics used by Best Buy employees to sell their Performance Service Plans. They were misled into thinking that the "plan" covered all damages and that they would receive a new product if they were to bring the product back to the store within the service period. Sales associates failed to disclose the details of the service plan. The results of the lawsuit are still pending.^[43]

Christmas controversy

During the approach to the 2006 holiday season, competitor Walmart, 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."^[44] The American Family Association criticized Bryant's statement and launched a campaign against Best Buy's policy.^[45] In reaction to the same policy, the Catholic League placed Best Buy on its 2006 Christmas Watch List.^[46] In 2007, Best Buy included the term "Christmas" in some of its marketing materials as well as greetings for Hanukkah and Kwanzaa.

Just before Thanksgiving 2009, the Christmas controversy was stirred up again when Best Buy's Black Friday ads featured the Muslim holiday Eid Al-Adha.^[47]

A typical sign reserving a parking space for customers who will be in and out of the store quickly, often near the handicap spaces, at a location in Orange, California

Pricing controversies

In the second quarter 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.^[48] 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 an 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.^[49]

Similar pricing errors occurred in July 2009, when the Palm Pre was mistakenly sold for 99.99 (versus the retail of 199.99), and Best Buy honored some of the sales,^[50] and in August 2009, when the site mistakenly listed a Samsung LN52A650 52" LCD HDTV on sale for $9.99, down from its retail price of $1699.99.^[51] The store chose not to honor the 9.99 HDTV error, instead refunding the sold units. Many customers, some who purchased dozens, threatened a class action lawsuit.^[52] According to the site's Condition of Use Policy,^[53] Best Buy reserves the right to cancel the orders of errors on its site. The listing for the TV was later removed entirely.

One of three such signs (much less common than the signs above) at the Carmel Mountain, San Diego location, which is another location that recently opened

Analog televisions

In April 2008, the U.S. Federal Communications Commission (FCC) fined Best Buy $280,000 for not alerting customers that the analog televisions they sold would not receive over-the-air stations after the digital transition on June 12, 2009.^[54] 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.

Environmental issues

Best Buy was one of several large companies named by Greenpeace in 2007 for purchasing raw materials or manufactured products derived thereof from logging companies that in the opinion of Greenpeace contribute to unethical deforestation of taiga in Canada.^[55]

Since that time, however, Best Buy launched what it calls Greener Together to increase the energy efficiency of its products as well as reduce consumer waste through more recyclable packaging and proper disposal of certain electronic components.^[56]

References

External links

• Official Website
• Best Buy Canada
• Best Buy UK
• Best Buy Mexico
• Best Buy Canada Ltd. (corporate website)
• Best Buy for Business