Best Buy, a Fortune 100 company, has become the largest and best consumer electronics outlet in the US, and has expanded to over 1,170 stores, since its establishment in the late 1960s
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Best Buy, a Fortune 100 company, has become the largest and best consumer electronics outlet in the US, and has expanded to over 1,170 stores, since its establishment in the late 1960s. This national chain whose slogan shouts “Thousands of Possibilities” provides customers with various electronic gadgets, home appliances, car stereo systems, music, movies and more. In addition to selling these products, the stores offer installation and maintenance services, technical support, and subscriptions for cell phone and Internet services. Products and services are available to customers through in-store shopping centers or through its online website, www.bestbuy.com.
Best Buy’s success was slow to start but eventually started to grow at a more rapid pace. In 1969, founder, Richard Schulze, and his partner first founded “Sound of Music” in Minnesota which was a home and car stereo store. Just two years later, Schulze decided to buy out his partner to expand the chain and target an older and more affluent group of customers by offering a wider array of appliances and VCRs. Between 1984 and 1987, Schulze and his company rapidly grew from only 8 stores to a total of 24 and sales grew at an equally rapid amount from $29 million to $240 million. The next year, results continued to work in Schulze’s favor with 16 more stores opened and sales improving by an ever successful 84%.
Most recently, Best Buy has recorded revenue of more than $35 million during the fiscal year ending in March 2007 which is an increase of 16.5% from 2006. Out of the $35 million revenue for 2007, $31 million of that was acquired by the domestic division (US) and the remaining was acquired by the international division (Canada and China).
The continuous expansion and success of Best Buy is due to the growing trend of technology. One aspect of technological advancements that is attracting more and more customers is the interest in high definition televisions and satellite radio stations. The result of this leads to televisions, DVD players, and audio systems, accounting for nearly 45% of sales at Best Buy's US stores. The company gets another 30% of its revenue from the home office segment, which includes computers, computer peripherals, and supplies such as paper and printer cartridges.
The company has announced plans to expand in its fiscal 2008 year (which began in March 2007) by growing its global retail store square footage by 10%, or about 130 stores. Some 95 stores are slated for the US and more than 35 international stores are due to open. The company has designs on operating some 1,800 stores in the US and Canada alone. About 20 new Five Star stores and eight to 10 new Best Buy stores are planned for the Chinese market by the middle of 2008.
In order to expand globally, the company has chosen China for its foray into overseas expansion. Best Buy, in partnership with Jiangsu Five Star Appliance Co., opened its first store in China in early 2007. To facilitate that strategy, Best Buy paid $180 million for a minority stake in Jiangsu Five in May 2006. The Chinese appliance and electronics retailer has more than 135 stores in eight China provinces.
To reach into new markets at home, Best Buy has started developing smaller concept stores in selected markets designed to target specific consumer segments, such as women or hip, urban youngsters. It is also expanding its Geek Squad business, which offers residential and commercial technical support. Most Geek Squads are located within existing Best Buy locations, but the company plans to open more stand-alone Geek Squads. It has a dozen stand-alone stores and more than 10,000 Geek agents. In 2006 the chain acquired home appliance and remodeling retailer Pacific Sales Kitchen and Bath Centers for about $410 million.
In recent news, Best Buy has decided to expanded its relationship with Apple Inc. and began selling Apple computers in some stores, as well as on its Web site, in late 2007.
Best Buy announced in October 2007 that it would stop selling analog televisions in order to focus on digital TVs, which is currently making a huge wave across consumers’ interests. This move anticipates the 2009 market change when all broadcasters will stop transmitting analog signals.
The company has also launched an online video sharing service in partnership with video stream services firm Mydeo. (It also took a minority stake in Mydeo.) The subscription-based service allows customers to share their home videos with friends and family in a secure, ad-free environment.
Best Buy is 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. In 2008, Best Buy will be the primary sponsor of the #19 Dodge Avenger driven by Elliott Sadler for a limited number of races. This car is owned by Evenham Gillette Motorsports.Best Buy’s competitors include Amazon.com, BJ’s Wholesale Club, Costco Wholesale Corporation, Dell Inc. and WalMart.