Best Buy opens 1st unit in Canada: corporate banner makes debut as a global brand - Brief Article

DSN Retailing Today, Sept 9, 2002 by Laura Heller

MISSISSAUGA, ONTARIO--Best Buy staged a small invasion last month when it quietly slipped over the border and opened the first international unit to bear its name. And while the event may have passed without fanfare, it marks the beginning of the company's foray into global retailing and the first of nearly 75 stores it plans to open in Canada.

Best Buy currently operates eight stores in the Ontario market under the Future Shop name, a company Best Buy acquired in November 2001. But rather than slap the Best Buy name on Future Shop's 88 stores and call it a day, the retailer retained the 17 leases already signed and proceeded to build new stores with plans to open those units under the Best Buy name, while continuing to operate and grow Future Shop. In fact, the 100th Future Shop unit opened Labor Day weekend.

"The intent with this acquisition is to continue to grow the Best Buy brand in Canada, as well as keep the Future Shop brand alive," said Tom Healy, president of Best Buy International. "These are independent brands, each is the No. 1 brand [in their respective markets] by far."

There are, however, differences between the two formats in both product mix and shopping experiences. Only about half of the product assortment at Future Shop overlaps with Best Buy, sales associates are commissioned and the format places less of an emphasis on entertainment products and software categories than Best Buy, said Healy.

Future Shop stores are smaller than a typical Best Buy at 27,000 square feet versus Best Buy's 45,000-square-foot box, but at 36,000 square feet, this newest store is somewhat smaller than that average. "The goal was to make it almost identical, but more capital efficient with a better return on space," said Healy. The company anticipates the Canadian unit will have a slightly lower volume than a U.S. store due to some differences m the Canadian economy.

"But there are no significant differences in the shopping experience," said Healy. "You won't know the difference between a Best Buy in Toronto and Miami." In all other ways the store is in line with Concept 5, the chain's latest prototype and features the signature racetrack, center aisle and interactive displays.

The unit also boasts a new interactive computer valley where gondola runs of PCs have been removed and the computer service area relocated in the center of the department. The layout allows technicians and sales consultants to better mix with customers in a more interactive environment.

Most stores going forward will include this new computer department layout, size permitting, according to James Damian, senior vp of visual merchandising and store design. The program was tested successfully in five stores in the Chicago market, yielding double-digit increases consistently over the evaluation of the test, he said.

While the Canadian Best Buy stores may share physical attributes with U.S. units, there are some slight differences in product assortment, said Healy. Cell phones are more prevalent in Canada and direct broadcast satellite systems are less common than in the United States, due to a more dominant cable TV presence. To avoid missteps in product assortment, all merchandise was determined by an entirely Canadian team. In fact, the acquisition of such local retail talent was one of the primary reasons Best Buy purchased Future Shop, said Healy.

Best Buy plans to grand open the entire Toronto market in late October, complete with fanfare. This first unit is meant to provide a training base for new associates, and an opportunity to work out kinks in the systems. Systems are also being implemented at Future Shop stores as Best Buy proceeds to impart operational efficiencies on its acquired brand.