Best Buy Reducing Store Size, Adding Mobile Stores
Richfield-based Best Buy Company, Inc., on Thursday outlined a growth strategy that includes reducing the size of its traditional stores, expanding its mobile stores, and adding hundreds of stores internationally.
At an annual investor and analyst meeting, Best Buy CEO Brian Dunn noted that the company began taking steps more than a year ago to re-engineer its business model.
The company plans to reduce the size of its U.S. “big box” traditional stores by 10 percent over the next three to five years, which is expected to save the retail giant $70 million to $80 million annually, according to Shari Ballard, co-president of the company's Americas division.
Best Buy is also focusing on expanding its mobile stores. The company plans to add 150 Best Buy mobile stores in fiscal 2012 and expects to have an estimated 600 to 800 stores within five years. The company currently has 175 mobile stores.
Mike Vitelli, co-president of the company's Americas division, said that Best Buy also plans to pursue additional growth opportunities in four key consumer technology product areas: mobile phones, tablets, gaming, and appliances.
Best Buy's international strategy is focused on four key geographic areas: Canada, China, Europe, and Mexico.
The company said that it will expand its Five Star brand, which is in China, and expects to double sales in China to $4 million over the next five years. To do this, the company plans to open between 400 and 500 stores.
Best Buy's buy-back program-which was launched earlier this year and allows customers to sell back old devices and receive gift cards to purchase new devices-is also expanding under the company's new growth strategy.
When the program was launched, it only covered laptops, netbooks, tablets, post-paid mobile phones, and televisions. Following the expansion, the program will also cover gaming, digital imaging, e-readers, and other devices.
Last month, the company confirmed rumors that it was shifting to an “everyday pricing” model, which the company says will ensure that shoppers will get the lowest price Best Buy can offer.
Best Buy is Minnesota's third-largest public company based on revenue, which totaled $49.7 billion for the fiscal year that ended in February 2010. The company reported $50.3 billion in revenue for its most recently completed fiscal year.