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Extended Company Profile

Best Buy Co., Inc.

search find buy►Type: Public (NYSE: BBY)
search find buy►Founded: 1966
search find buy►Headquarters: Richfield, Minnesota, USA
search find buy►Key people: Brad Anderson, CEO & Vice Chairman
search find buy►Richard M. Schulze, Founder & Chairman
search find buy►Industry: Retail
search find buy►Products: Retail-Electronics
search find buy►Revenue: US$30.8 billion
search find buy►Employees: 125,000
search find buy►Website: http://www.bestbuy.com

Best Buy Co., Inc. (NYSE: BBY) is a Fortune 100 company and the largest specialty retailer of consumer electronics, personal computers and related goods in North America. The company's subsidiaries include Geek Squad, Magnolia Audio Video, and Future Shop in Canada, which together operate over 1100 stores in the United States and Canada. The company's corporate headquarters are located in Richfield, Minnesota, USA (near Minneapolis).

Best Buy was named, "Company of the Year," by Forbes magazine in 2004, "Specialty Retailer of the Decade" by Discount Store News in 2001, ranked in the Top 10 of "America's Most Generous Corporations" by Forbes magazine, and made Fortune Magazine's List of Most Admired Companies in 2006.


History
In 1966, Richard M. Schulze opened Sound of Music, an audio specialty store, in St. Paul, Minnesota. The company grew over the following years, expanding to nine locations by 1980. In 1981, Schulze's most successful store was destroyed by a tornado. This event resulted in a highly successful sale that combined a large selection with low prices and heavy advertising. Similar "Tornado Sales" became an annual Sound of Music event. This was the predecessor to today's typical Best Buy store, with large quantities of product, recognizable staff in polo shirts, and lots of marketing.

In 1983, the company's name was changed to Best Buy Co. Inc., and the store shifted its focus to consumer electronics. Over the following decades, the company continued to evolve and grow.

On November 4, 2001, Best Buy purchased Future Shop, a similar retailer which operated in Canada. Best Buy continued to operate existing and trusted Future Shop locations while adding new Canadian stores under the Best Buy branding.

In 2002, Brad Anderson succeeded Schulze as Best Buy's CEO. The company also acquired Geek Squad®, a 24-hour computer support taskforce which borrows imagery from the FBI for its employees, which they refer to as "Agents". Their uniforms are starched white short-sleeved dress shirts, black pants, dress shoes and a (clip-on) black tie, and senior Agents also wear a badge on their belt. The secret-agent imagery even extends into the store, where their area is referred to as the "Precinct". The Geek Squad, founded by Robert Stephens in 1994, offers around the clock technical support on any computer problem at flat rate prices. Their clients include celebrities such as Larry King, The Rolling Stones, Ice Cube, and Cindy Margolis. In 2004, Geek Squad put precincts in every Best Buy store, nationwide, offering in-store service during store business hours in addition to 24/7 in-home services, known by the famous police-colored Volkswagen.

In 2003, Best Buy began to segment their stores, which is considered a major part of the company's "customer centricity" transformation. Customer Centricity is an attempt to attract longer-term repeat business by focusing on customer loyalty, and on needs that are unique to individual areas (called "segments"). This means a focus on attracting repeat visits from existing customers as well as gaining new ones. As part of the change, Best Buy no longer refers to their employees as "Product Specialists," but as "Customer Specialists." While many are well educated about the product they sell, employees are trained to give excellent customer service by asking "lifestyle questions" to determine the most suitable product, services, and accessories for the customer, in an attempt to give the customer the "complete solution" out the door.

In 2006, Best Buy acquired a majority interest in the retail chain Jiangsu Five Star Appliance Co., Ltd. China’s fourth-largest appliance and consumer electronics retailer. Best Buy announced that it plans to open its first Best Buy-branded store in Shanghai.

Business model
Best Buy sells consumer electronics as well as a wide variety of related merchandise such as computers, software, video games, music, DVDs, cellular phones, digital and video cameras, as well as home appliances (washing machines, dryers, and refrigerators), in a non-commissioned sales environment. Each store also includes a department for A/V equipment for automobiles, offering on-site installation services, as well as a Geek Squad "precinct" for computer repair and warranty service.

Best Buy building exteriors are usually light brown in color with the entrance in an area designed to look like a blue box emerging from the rest of the structure. Some stores have a more utilitarian brick building without the blue structure.

As of February 25, 2006, the company operates 742 Best Buy Stores, 20 Magnolia Audio Video Stores (specializing in high-end electronics), and 12 stand-alone Geek Squad operations through its U.S. retail subsidiary. They also operate 44 Best Buy and 118 Future Shop stores, as well as 5 stand-alone Geek Squad operations in Canada.[7] In 2003, the company opened its first international global procurement office in Shanghai, China, and also operates sourcing offices in Beijing and Shenzhen, primarily to reduce costs and increase the speed to market by purchasing products directly from manufacturers. As of 2006, they are also in the process of opening lab stores in China to open an avenue to the Asian market.

Demographics
Customer Centricity is the name of a business movement centered around catering to specific customer demographics. These customer demographics are known as "segments". Segments are conceived primarily by the lead corporate office, and represent Best Buy's most profitable demographics. The current segments are given codenames for the groups they represent — Jill, Ray, Buzz and Barry. There is also Best Buy for Business, which caters to small and medium businesses as well as the government and education markets, that was initially viewed as another segment but has since developed into a more concrete pillar of the company. There are demographics beyond these core five, such as the empty-nesters "Helen and Charlie", and the young, single woman "Carrie," however Best Buy has chosen not to build stores around these segments for now.

"Jill" stores are a customer segment that represents the average suburban mom and differs from other Best Buy stores by stocking products and offering services for her and her family. Typically, this includes a greater emphasis on home and kitchen appliances, Hello Kitty and Disney products for the kids, and the addition of personal shopping assistants. Customers that fall into the customer segment "Buzz," however, are young men interested in the latest and greatest technology. When a new video game system is released, he purchases it. "Barry" is the sometimes older, typically wealthier customer, interested in the best technology he can get to fit his various needs without worrying as much about costs. "Ray" is the typical married blue-collar man, and while he may want the latest and greatest technology, his wife, Maria, is often the one that gives him a jolt of reailty. "Ray" is not necessarily wealthy, and so prices and other special offers are very important while at the same time he values name-brands he can trust. Best Buy plans to add more customer segments as their customer centricity plan grows.

Segment stores usually start out as "lab stores" to test the area's acceptance to the theme and segment products and services. While the renovation of stores is expensive, sometimes nearing $1 million per store, CEO Brad Anderson claims that stores that have already been transformed have doubled their growth rate versus stores that have yet to be transformed. As of September 2005, only about 120 Best Buy stores have been segmented. Ongoing transformation has become focused less on segmenting individual stores towards a singular, targeted customer segment and more towards offering parts of each segment within every store.

As of July 2006, Best Buy announced it would be merging several segments, each store dedicated to one of three lifestyle segments. The three lifestyle segments are Urban Trendsetters, Upscale Suburban, and Middle America. This merging of similar segments was done to raise the amount of customers that fit in the targeted segment from below 50% to above 75%. The Urban Trendsetters segment is made up of Carrie, based on the character from Sex And The City, and Buzz, a previous Best Buy segment. The Upscale Suburban segment is made up of the previous segments, Barry and Jill. The Middle America segment is made up of the previous Ray segment along with a female version named Maria.

As with most retailers, Best Buy owns some of the brands it sells by using large government-owned manufacturers in China to place a Best Buy brand on a variety of products. Best Buy has five private labels which include Insignia, vpr Matrix, Dynex, Init, Geek Squad, and its newest addition Rocket Fish(currently only available in a few launch stores). Insignia focuses on actual electronic equipment, including televisions, monitors, car stereos, home theatre systems, and portable audio players. vpr Matrix (Discontinued) focused on personal computers and accessories including desktops, notebooks and computer monitors. Dynex focuses on a wide variety of computer and entertainment accessories. Rocket Fish focuses on cables primarily used with home theater installation and setup. Best Buy avoids using the "Best Buy" name on these products to avoid the typical negative connotations of buying a store brand, and uses more than one brand name to give a greater sense of selection. By providing private label items, Best Buy can provide products at much lower prices than brand-name manufacturers, and gain more profit, while often retaining good quality products.

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