Best Buy Tests Sharing Its Sales Floor with Other Retailers
In its turnaround effort, struggling retailer Best Buy Company, Inc., has shuttered big-box stores, shifted emphasis to smaller Best Buy Mobile locations, and cut thousands of jobs.
The Richfield-based company has announced plans to cut costs and downsize its big-box footprint, and it said it would accomplish the move in part by subleasing space to smaller retailers. That has involved walling off portions of some existing big-box stores to allow other retailers to lease space in the buildings while operating independently of Best Buy.
But in Michigan, the company is testing a different model: Furniture retailer Gardner-White is subleasing space within two Best Buy stores—and it’s sharing the main entrance.
Best Buy and Gardner-White each have their own sales associates tending to their respective parts of the store, but the space is open, and customers can peruse items from both companies, according to Best Buy spokeswoman Carolyn Aberman.
Will more retailers begin co-inhabiting Best Buy’s big-box stores? “This is clearly a test, and we’re looking at the feasibility of it,” Aberman said.
“We’ll be examining its success through the holidays to see how and if we will move forward” to roll out a similar concept in other stores, she added.
Partnerships with furniture retailers are nothing new for Best Buy, although the concept of sharing in-store space represents a new venture. About four years ago, the retailer began partnering with furniture retailers on promotions, through which some furniture shoppers receive free televisions or Best Buy gift cards when purchasing eligible furniture products. Such partners include Little Canada-based Slumberland Furniture, which purchases products from Best Buy to use in its promotions.
But the benefit of partnerships with furniture retailers extends beyond that: They help boost foot traffic at Best Buy stores and also increase brand exposure to the female demographic, which currently “isn’t a dominant portion” of Best Buy’s traditional guests, Aberman said.
“We’re meeting a new customer through furniture stores that we don’t always have access to,” she added.
Subleasing big-box space to other retailers is one of many options for Best Buy as it attempts to turn itself around. Hubert Joly, who was appointed CEO in September, is overseeing the turnaround attempt, although the company on Tuesday reportedly canceled an investor meeting in New York due to Hurricane Sandy. The delay will postpone Joly’s opportunity to share his turnaround plan with investors, and no new date has been set for the meeting, according to a report by Reuters.
Meanwhile, founder Richard Schulze is formulating a takeover bid for the company. A report by the Star Tribune speculates that Best Buy’s investor meeting will occur next week, since an agreement between the company and Schulze requires him to submit a bid by mid-November.