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Best Buy’s first year in the UK

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It has only been a year since the US-based electricals retailer Best Buy entered the UK market but its first superstore in Thurrock, Essex was a long time coming.

Hugely successful on the other side of the Atlantic, the retailer had originally looked set to take this country by storm with its interactive and immersive approach to customer sales but the global economic slump put a halt to its invasion plans.

Its first outlet opened a year behind Best Buy’s original schedule and while it had initially hoped to open as many as 200 standalone shops in the country, so far there are only eight in operation with a further three more planned before the end of the year.

A partnership with Carphone Warehouse however has seen Best Buy sections in many of the telecoms retailer’s stores, which the US firm says gives it the perfect opportunity to trial new systems and operating models.

Despite this less than dramatic entry onto the UK scene, Steve Jensen, Managing Director of Best Buy in the UK, argues that the firm has followed the right strategy considering the difficult circumstances.

“The recent few years have proven a challenging environment for all retailers, not just here in the UK but right across the globe,” Jensen commented.

“That said we remain confident that our entry into the UK market has delivered and will continue to deliver. The UK is a mature market for consumer electricals retailing; however we feel there is a real opportunity to deliver better service through our people.”

Best Buy’s USP has always been its unique offering to customers. In the US it pioneered the interactive electricals store with ‘Blue Shirts’ and the ‘Geek Squad’ always on hand to offer expert advice.

When it was clear that Best Buy was eyeing up UK expansion, rivals in the electricals sector were understandably nervous but its delayed arrival allowed time for them to improve their stores in order to fight off the challenge.

Matt Piner, Retail Analyst at Verdict, said: “The main retailer to rise to the challenge of Best Buy’s arrival has been Dixons.

“The retailer has improved its store environments, making them more aspirational and placed more emphasis on customer service and trading shoppers up its range architecture.”

PC World and Curry’s formats have been cleaned up as part of Dixon’s Renewal & Transformation plan and a visit to its Black outlet in Birmingham will convince any doubters that the UK business is now serious about spearheading cutting edge store design.

What Best Buy was first to realise was that consumers are becoming increasingly comfortable with buying tech products on the net, and in order to get them in-store retailers must offer an engaging shopping experience unique to bricks and mortar.

Jensen argues that though rivals may be trying to emulate its way of doing business, Best Buy offers too much of a complete service for them to compete with.

“To try and deliver across all aspects of a customer’s shopping journey, to the level that we aspire to, is simply not easy for our competitors to do,” Jensen added.

“They are forced to invest on many fronts in order to do this. Given the current global economic challenges, this is especially difficult for them.

“We believe, that with our history of truly seeking customer and employee insights, listening to them, and incorporating them all along our journey, Best Buy is well positioned to meet (and exceed) the needs of our UK consumers.”

Jensen claims that Best Buy’s “culture simply can’t be replicated” but whether this is true or not, even the most consumer friendly electricals stores would have struggled for sales growth recently.

It is predicted that Kesa Electricals, owner of Comet, will report losses for its UK operation this week, while the first 11 weeks of the year saw Dixons trading decline seven per cent like-for-like (LFL). Meanwhile Best Buy’s own UK LFL sales only grew in the low single digits during its fourth quarter.

Jamie Talmage, Retail Analyst at BDO, commented: “The timing of Best Buy’s entrance into the UK has coincided with a prolonged period of weak demand across electronics, as well as rapid growth in online sales.

“Unfortunately, both these trends have been unfavourable to Best Buy.”

Online is an area Best Buy UK is continuing to innovate in, to its credit, with several initiatives such as extensive blogs, written and video reviews, editorial-based product descriptions, and a community forum all appearing on its website.

More developments are on their way according to Jensen, as Best Buy continues to try and replicate its unique ‘Blue Shirt’ service online.

For some these improvements have come too late however, with Piner arguing that “going forward Best Buy will struggle with the consolidated nature of the market, with a lack of exciting new products with which to drive growth & recognition, and with a lack of suitable sites for stores”.

Of course Jensen does not see it this way, and is right to see multichannel as the key to the company’s future success.

If Best Buy can get its online offering attractive to and trusted by UK consumers, its lack of stores compared to its competitors will matter less and it will be on its way to firmly grounding itself within this country.

Published on Thursday 12 May by Editorial Assistant

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