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Best Buy & Co. Inc.
612-291-1000
7601
Penn Avenue South
Richfield, MN 55423
www.bestbuy.com
Computer Retailers -
Category Directory
Sales
$25
billion
Business Description
We
are a specialty retailer of consumer electronics, home-office products,
entertainment software, appliances and related services. We operate retail
stores and/or commercial Web sites under the brand names Best Buy (BestBuy.com
and BestBuyCanada.ca), Future Shop (FutureShop.ca), Magnolia Audio Video (MagnoliaAV.com)
and Geek Squad (GeekSquad.com), as well as an outlet store on eBay.
Our vision is to make life fun and easy for consumers. Our business strategy
is to bring technology and consumers together in a retail environment that
focuses on educating consumers on the features and benefits of technology
and entertainment products, while maximizing overall profitability. We
believe our stores offer consumers meaningful advantages in store
environment, product value, product selection and customer service, all of
which advance our objectives of enhancing our business model, gaining market
share and improving profitability.
We
were incorporated in the state of Minnesota in 1966 as Sound of Music, Inc.,
and changed our name to Best Buy Co., Inc. in 1983. We began as an audio
components retailer, and with the introduction of the videocassette recorder
in the early 1980s, expanded into video products. In 1983, we revised our
marketing strategy and began using mass-merchandising techniques, which
included offering a wider variety of products and operating stores under a
"superstore" concept. In 1989, we dramatically changed our method of
retailing by introducing a self-service, noncommissioned, discount-style
store concept designed to give the customer more control over the purchasing
process.
In fiscal 2000, we established our first online shopping site, BestBuy.com.
Our "clicks-and-mortar" strategy is designed to empower consumers to
research and purchase products seamlessly either online or in retail stores.
Our online shopping site offers products in all of our principal product
categories. In fiscal 2004, we continued to make enhancements to improve the
shopping experience on our Web sites.
The Best Buy store format has evolved to include more interactive displays
and, for certain products, a higher level of customer service, with the
latest version designed to increase labor efficiency and to improve
merchandising. In fiscal 2000, we introduced a small-market Best Buy store
concept that offers merchandise in the same product categories as larger
stores, with a product assortment tailored to each respective community. In
fiscal 2004, as part of our customer centricity initiative, we developed and
tested several new store formats and customized the product offerings within
these stores to meet the needs of our customers better.
Our International segment was established in connection with our acquisition
of Future Shop Ltd. (Future Shop) in fiscal 2002. During fiscal 2003, we
launched our dual-branding strategy in Canada by introducing the Best Buy
brand. We continue to believe the Canadian market can support both brands.
Operations
U.S. Best Buy
U.S. Best Buy stores follow a standardized and detailed operating procedure
called Standard Operating Platform (SOP). The SOP includes procedures for
inventory management, transaction processing, customer relations, store
administration, product sales and merchandise display. All stores function
in exactly the same manner under the SOP. During fiscal 2004, in conjunction
with our customer centricity initiative, we began testing a new, Adaptive
Operating Platform (AOP). The AOP decentralizes authority and allows the
person closest to the customer to make informed decisions. This change may
involve some variation in product offerings, staffing, promotions and store
design.
U.S. Best Buy store operations are organized into three divisions. Each
division is divided into regions and is under the supervision of a senior
vice president who oversees store performance through regional vice
presidents. Regional vice presidents have responsibility for a number of
districts within their respective region. District managers monitor store
operations and meet regularly with store managers to discuss merchandising,
new product introductions, sales promotions, customer loyalty programs,
employee satisfaction surveys and store operating performance. Similar
meetings are conducted at the corporate level with divisional and regional
management. Our Senior Vice President of retail operations has overall
responsibility for retail store processing and operations, including labor
management. Each district also has a loss prevention manager, with product
security personnel employed at each store to control physical inventory
losses. Advertising, merchandise buying and pricing, as well as inventory
policies for U.S. Best Buy stores are centrally controlled.
U.S. Best Buy stores are generally open 75 hours per week, seven days a
week. A store is typically staffed by one manager and four to five assistant
managers. The average staff in each store ranges from 65 to 150 people,
depending on store size and sales volume. Beginning in the first quarter of
fiscal 2005, the management structure and store staffing levels of our U.S.
Best Buy stores were adjusted and is now based on sales productivity.
Previously, management structures and store staffing levels were based
primarily on store size.
Merchandise
U.S. Best Buy
U.S. Best Buy stores offer merchandise in four product categories: consumer
electronics, home office, entertainment software and appliances. Consumer
electronics, the largest product category for fiscal 2004 based on revenue,
consists of video and audio products. Video products include televisions,
digital cameras, DVD players, digital camcorders and digital broadcast
satellite systems. Audio products include car stereos, shelf systems and
speakers, home theater audio systems, portable audio equipment, audio
components and mobile electronics. The home office category includes desktop
and notebook computers and related peripheral equipment, telephones,
cellular telephones and MP3 players. Entertainment software products include
DVD movies, video game hardware and software, compact discs and computer
software. The appliance category includes major appliances as well as
vacuums, small electrics and housewares.
Distribution
U.S. Best Buy
Generally, U.S. Best Buy stores' merchandise, except for major appliances
and large-screen televisions, is shipped directly from manufacturers to our
seven distribution centers located in California, Georgia, Minnesota, New
York, Ohio, Oklahoma and Virginia. Major appliances and large-screen
televisions are shipped to satellite warehouses in each major market. U.S.
Best Buy stores are dependent upon the distribution centers for inventory
storage and shipment of most merchandise. However, in order to meet release
dates for selected products and to improve inventory management, certain
merchandise is shipped directly to the stores from manufacturers and
distributors. On average, U.S. Best Buy stores receive product shipments two
or three times a week depending on sales volume. Generally, e-commerce
merchandise sales are either picked up at U.S. Best Buy retail stores or
fulfilled through our distribution centers. We also operate a dedicated
distribution center in Indiana for U.S. Best Buy stores' entertainment
software.
We believe our current distribution centers and the relocation of the
Oklahoma distribution center to a larger facility in fiscal 2005 will
accommodate our expansion plans for U.S. Best Buy stores for the next
several years.
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