Best Buy Will Only Open 6-8 Stores In U.S. This Year, Focusing On International Growth

Best Buy has just announced some major moves it plans to make in order to deliver more value back to their stockholders. Even when you are the biggest consumer electronics retailer in the world, if your shareholders aren’t happy then nobody is happy. Today, BB outlined a series of steps they would be taking to try and improve returns and overall growth in “key strategic businesses”.

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The company reported that fiscal 2012 new store openings will be focused primarily on the profitable growth platforms of its Best Buy Mobile business in the United States and its Five Star business in China. In addition, the company plans to restructure its operations in its Best Buy-branded China and Turkey markets. The company also announced plans to improve efficiencies in its U.S. supply chain operations.

The company announced the following selected new store plans for fiscal 2012:

  • Best Buy Mobile small-format stores: The company plans to open approximately 150 Best Buy Mobile stand-alone-stores in the U.S. in fiscal 2012. These openings would take the total Best Buy Mobile stand-alone-stores to approximately 325 in the U.S. at the end of fiscal 2012. Analysis: Best Buy loves these, they are cheap to open, operate and maintain and they can put them in high traffic areas to maximize visibility.
  • Five Star in China: The company plans to open 40 to 50 Five Star stores in growing markets in fiscal 2012 in China. These openings would take the total Five Star stores to approximately 210 at the end of fiscal 2012. Analysis: Same as above
  • Best Buy branded large-format stores: The company plans to open approximately 6 to 8 large-format stores in the U.S., resulting in square footage growth of less than 1 percent . The company also plans to open a total of approximately 18 Best Buy-branded large-format stores in Canada, United Kingdom and Mexico during fiscal 2012. Analysis: This is a shrewd move, the U.S. market is almost saturated and its better for them to move more aggressively into international market now than later.
  • Closure Of All Operations In Turkey And Restructuring Of China Operations: The company plans to exit the Turkey test market and to restructure the Best Buy-branded test stores in China. The exit from the Turkey market includes closure of all current operations in the country, including the company’s two Best Buy large-format stores. Restructuring activities in China include closure of the nine Best Buy-branded stores. The company intends to explore other more profitable growth options for the Best Buy brand and plans to reopen two of the China stores at a later date. The company anticipates consolidating its support operations for the Best Buy brand in China with the existing Five Star business. Analysis: They tried to move into Turkey and the test just didn’t work. I really like what Best Buy is doing with both these moves, staying with what works and stopping what doesn’t.

It appears that Best Buy is keenly focused on not over-saturating its brand and taking advantage of the exploding international markets. Good moves all the way around, sound business decisions.

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