| Type | Public |
|---|---|
| Traded as | NYSE: BBY S&P 500 Component |
| Industry | Retail |
| Founded | 1966 as Sound of Music 1983 as Best Buy |
| Founder(s) | Richard M. Schulze |
| Headquarters | Richfield, Minnesota, U.S. |
| Key people | Richard M. Schulze (Chairman) Brian J. Dunn (CEO) |
| Products | Consumer electronics |
| Revenue | US$50.3B (FY 2011)[1] |
| Operating income | US$2.11B (FY 2011)[1] |
| Net income | US$1.28B (FY 2011)[1] |
| Total assets | US$17.8B (FY 2011)[2] |
| Total equity | US$6.60B (FY 2011)[2] |
| Employees | 180,000 (2010) |
| Subsidiaries | Future Shop Geek Squad Magnolia Napster Pacific Sales Speakeasy |
| Website | www.bestbuy.com |
Best Buy Co., Inc. (NYSE: BBY) is an American specialty retailer of consumer electronics in the United States, accounting for 19% of the market. It also operates in Mexico, Canada & China.[3] The company's subsidiaries include Geek Squad, CinemaNow, 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,[4] and Mexico. In addition, the company has opened over 100 Best Buy Express Automated Retail stores or "ZoomShops", operated by Zoom Systems, in airports and malls around the U.S.[5] The company's corporate headquarters are located in Richfield, Minnesota.
Best Buy was named "Company of the Year" by Forbes magazine in 2004,[6] "Specialty Retailer of the Decade" by Discount Store News in 2001,[7] ranked in the Top 10 of "America's Most Generous Corporations" by Forbes magazine in 2005 (based on 2004 giving),[8] and made Fortune magazine's List of Most Admired Companies in 2006.[9]
On March 9, 2009, Best Buy became the largest electronics retail store (online and bricks and mortar) in the eastern United States, after smaller rival Circuit City went out of business.[10] Fry's Electronics remains a major competitor in the western United States, while hhgregg remains competitive in the eastern United States. Many locations feature in-store pickup, which can be arranged through the company's website.[11]
Best Buy is also a retailer of cellular phones with phones from Verizon Wireless, AT&T Wireless, Sprint PCS, and T-Mobile. Best Buy also has standalone Best Buy Mobile stores in shopping malls that sell only a subset of products carried at the larger stores.
In 2011, during the three-month period ended February 26, Best Buy saw its revenue and profits slide, generating a profit of $651 million on revenue of $16.26 billion. In comparison to the same period in 2010, it tallied $16.55 billion in revenue and a $779 million profit.[12]
Contents |
In 1966, Richard M. Schulze and business partner James Wheeler opened Sound of Music, an audio specialty store, in Saint Paul, Minnesota.[13][14] In 1967, Sound Of Music acquired Kencraft Hi-Fi Company and Bergo Company. Two additional Sound of Music stores were opened near the University of Minnesota and in downtown Minneapolis. The Sound of Music ended its first year with gross sales of $173,000 (USD). In 1969, Sound of Music's stock began trading as publicly-held company, the company enacted its first employee stock option plan, and three stores opened in the Twin Cities area. In 1970, Sound of Music hit the $1 million mark in annual revenues. In 1979, Sound of Music became the first suppliers of video and laserdisc equipment including Panasonic, Magnavox, Sony and Sharp.
On June 14, 1981, A tornado hit the Roseville, Minnesota store. Sound of Music responded with a "Tornado Sale," (with the sale promoted as a "Best Buy") and it became an annual event. In 1983, Sound of Music's board of directors approved a new corporate name: Best Buy Co., Inc.,[13] the company opened first superstore in Burnsville, Minnesota, featuring expanded selling space, a wide assortment of discounted brand-name goods, central service, and warehouse distribution. Stores began selling appliances and videocassette recorders. In 1985, Best Buy (symbol BBY) debuted on the New York Stock Exchange[13] with an offering of 8.3 million shares. In 1987, Best Buy's brand logo changed to the yellow tag. In 1989, Best Buy unveiled a new "grab-and-go" store format.
In 1990, Best Buy eliminated commissions for standalone sales people, but retained bonuses for management and supervisors. In 1992, Best Buy hit the $1 billion mark in annual revenues. In 1994, Best Buy expanded to the Maryland and Virginia markets. In 1997, Best Buy became the first national retailer to sell DVD hardware and software.. In 1998, Best Buy sponsored Stevie Nicks Enchanted Tour. In 2000, Best Buy entered the online retailing business by launching Bestbuy.com, and acquired Magnolia Audio Video, a retailer of high-end consumer electronics.[13] Music compact cassettes were removed from most stores.
In 2001, Best Buy acquired the Canada-based electronics-chain Future Shop Ltd.,[13] which marked the company's entrance to the international marketplace.[14] Though fully owned by Best Buy, Futureshop remains a separate entity operating independently from Best Buy Canada. Best Buy acquired Musicland,[13] a mall-based retailer for music and entertainment software. Best Buy launched Redline Entertainment, an independent music label and action-sports video distributor. In 2002, Brad Anderson succeeded Schulze as Best Buy's CEO. The company acquired Geek Squad, a 24-hour computer support taskforce. The first Canadian Best Buy store opened in Mississauga, Ontario.
In 2003, U.S. Best Buy stores surpassed the 600 store mark. The company opened its first global sourcing office in Shanghai, Best Buy corporate offices were consolidated in one headquarter campus, Best Buy divested itself of Musicland,[13] the company began to segment their stores, which is considered a major part of the company's "customer centricity" transformation, the Reward Zone loyalty program was introduced in the U.S. In 2004, Virtucom Group of Syracuse, New York was hired to handle all online content for Best Buy which generated over $3 billion per year in revenues. In 2004, Geek Squad precincts were opened in every Best Buy store nationwide, offering in-store service during store business hours.
In 2006, Best Buy acquired a majority interest in the retail chain Jiangsu Five Star Appliance Co., Ltd., China’s fourth-largest appliance chain.[15] In 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.[16] Best Buy became the first major retailer to exit the analog television market, carrying only digital products that became mandatory in June 2009 by the FCC.[17] In 2007, Best Buy launched mini-Geek Squad precincts in Office Depots in Orlando, Florida and Denver, Colorado. They also launched mini-Geek Squad precincts in FedEx Kinko's in Indianapolis, Indiana and Charlotte, North Carolina. These test markets and/or relationships with these companies ended in all markets late 2007 early 2008. In February 2011, it closed all of its own-brand stores in China, but plans to reopen two by the end of the year.
On November 17, 2011 Best Buy opened its first store in Northern Mexico, said store will be located in the city of Monterrey.
In November 2011, it was announced that the 11 stores it had opened in the UK as part of a joint venture with Carphone Warehouse were to close, amongst the reasons cited for the failure was that the advertising campaign did not affect the perception by British consumers that it sold fruit and vegetables.[18]
On October 24, 2008, Best Buy opened their 1000th physical store, located in the Mall of America in Bloomington, Minnesota. In 2008, Best Buy announced the opening of its first pilot stores in Puerto Rico,[19] and Mexico, as well as another store in Shanghai. Best Buy decided to promote Blu-ray over HD-DVD, a move which ultimately contributed to Toshiba's Corps. decision to drop HD-DVD.[20] In May it agreed to buy a 50% holding in UK-based mobile phone operation The 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 (growing to over 100 stores by 2010), making the company the second largest musical instrument distributor in the US (the largest being Guitar Center).[21] 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.[22] In mid-September, Best Buy announced its planned acquisition of Napster for $121 million.[23] 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.[24][25]
In 2009, Best Buy Canada, in partnership with The Carphone Warehouse, opened a Best Buy Mobile "Store Within a Store" at all Best Buy locations.[26] 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 stream content to any device sold by Best Buy that connects to the Internet.[27] On 19 December, the first Best Buy in Turkey opened in İzmir.[28] In 2010, Best Buy announced that it would open branded superstores in the UK and other European countries in a joint venture with The Carphone Warehouse.[29] Best Buy opened stores in the UK, with plans for up to 200 stores eventually, although the initiative was delayed until the second quarter of 2010 by the state of the retail market. The first two Best Buy stores in the UK opened at The Junction retail park near Lakeside Shopping Centre in Thurrock Essex, and near Southampton at Prupim’s Hedge End Retail Park.[30] Best Buy had opened four more stores to the end of 2010, Five more were planned for early 2011. With Best Buy's financial struggles in the UK, it was announced that Best Buy Europe will be closing their 11 stores by the end of 2011 and concentrating on its Carphone Warehouse outlets. [31]
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 installation of car audio and video equipment, on-site installation services, as well as a Geek Squad "precinct" for computer repair and warranty service and accidental service plans.
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 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]
During September 2008, partially in an effort to eliminate losses from the 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 name of this service has since changed to Geek Squad Protection as of October 16, 2011. 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, accidental damage coverage, a 20% trade in bonus, and prioritization of service claims.[34] 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[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 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]
In Late August 2010, Best Buy launched Video Game Trade-Ins and was now buying used video games, just like GameStop. The Game Trade-Ins were located in over 600 Best Buy Stores in the U.S.
On November 12, 2010, the first "Connected" Best Buy will open in South Charleston, West Virginia. The "Connected" store is the first of many prototype stores that are being tested in select stores in the Pittsburgh and Las Vegas markets. These stores present more opportunities for networking and connections outside of normal electronics. Best Buy Chief Executive Brian Dunn described it as a "connected world strategy"[40] to set Best Buy apart from other electronics retailers.
Best Buy now provides a new Buy Back Program. The program enables the customers to purchase the program at a set price, dependent on the item purchased and over time sell the item back to Best Buy at a set cost. For example, the first 6 months give 50% of the original cost back to the customer on a Best Buy gift card. Essentially the program "future proofs" the technology, allowing the consumers to get the technology they want now, and have a guaranteed amount waiting for them when it's time to upgrade.
Customer Centricity is the name of a former business movement centered on catering to specific customer needs and behaviors.[3] 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 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.[3]
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[42]
| Geographic Region | Total Sales ( in millions) |
| United States | 35,070 |
| Europe | 3,205 |
| Canada | 5,174 |
| People's Republic of China | 1,558 |
| Other Area | 8 |
From June, 2009 there were eight Best Buy stores open in the United Kingdom, the first to open was in Thurrock, with later branches opening in Croydon, Derby, Hayes, Liverpool, Merry Hill and Southampton following, with the most recently opened stores in Nottingham and Rotherham.[43]
Though, On 7 November, 2011, it was announced that all eleven stores in the UK would be closed, due to huge losses of close to £140m. [44] All stores in the United Kingdom were closed on 23 December, 2011.
According to MVC Magazine this was largely attributed to Best Buy's slow decent into the UK (they announced their entry to the UK market almost two years before opening any stores, giving their rivals Curry's PC World and Comet a year to improve their businesses and prepare for their competition), and also due to the fact they opened stores during a recession. [45][46]
On February 22, 2011, Best Buy closed all nine stores in the People's Republic of China without prior notice to customers and media. According to the announcement on the official website of Best Buy China, it will continue to invest in electronics retail markets in China. The investment project includes opening more than 50 'Five Star Electronic' branded stores across the country.[47]
In December 2011, Best Buy cancelled a number of online orders immediately before Christmas despite those orders having being made up to a month earlier as part of its Thanksgiving promotion.[48]
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."[49] Best Buy ultimately settled for $200,000, but admitted no wrongdoing.[50] 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 allegedly used by Best Buy employees to sell their Performance Service Plans. They were supposedly misled into thinking that the plan covered all types of damages and that they would receive a new product if they were to bring the product back to the store within the service period. According to the lawsuit, sales associates allegedly failed to disclose the details of the service plan. The results of the lawsuit are still pending, and it is unknown whether the misunderstanding was a result of misinformation given out by sales associates, or by a lack of understanding on the part of the customer.
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.[51] 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.[52]
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.[53] Best Buy reserves the right to cancel the orders of errors on its site.
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.
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]
|
|||||||||||
|
|||||