Best Buy positions Magnolia next to core concept - Magnolia Audio Video continues expansion into Los Angeles market this month with opening of first store under same roof as a Best Buy

DSN Retailing Today, Oct 27, 2003 by Doug Desjardins

LOS ANGELES -- Magnolia Audio Video continued its expansion into the Los Angeles market this month with the opening of its first store under the same roof as a Best Buy. The new store in the Woodland Hills section of Los Angeles will be tracked closely by both chains and could precede a larger rollout.

Best Buy remodeled an existing 58,000-square-foot store this summer to accommodate construction of a 12,000-square-foot Magnolia outlet on the south end. The layout places the store entrances about 100 feel apart and allows each store to share customer traffic.

"This is something rather new," said Tom Conrad, coo for Magnolia, a 22-store chain based in Kent, Wash., that Best Buy purchased in 2001. "Putting a big-box consumer electronics retailer and a high-end specialty retailer together creates a destination that doesn't exist anywhere else."

The two stores are completely walled off from each other and operate as separate businesses. The only common area is a car stereo installation shop that serves customers from both stores.

Both retailers expect the stores to play off each other's retailing and service strengths. Best Buy generates a huge amount of traffic in its stores but doesn't always carry the higher-end brands and products some consumers want. On the other end of the spectrum, Magnolia specializes in high-end products and cutting-edge technology but does not have a wide breadth or depth of basic consumer electronics products.

The interplay between the neighboring stores was already at work during the store's grand opening on Oct. 10. Magnolia director of sales Kris Peterson said store employees had already sent at least half-dozen customers over to Best Buy that morning.

"We had somebody looking for a high-end Palm Pilot we don't carry here, but they have next door at Best Buy," said Peterson. "And it was the same case with customers looking for an X-Box or a PlayStation 2." By the same token, Magnolia received referrals from Best Buy for people looking for large plasma televisions and high-end speakers.

Magnolia executives expect the new location to become one of its highest volume stores and one that could provide the blueprint for future growth. "We're going to be tracking the performance of this store very closely," said Conrad. "And if it's as successful as we think it will be, we'll be looking for more opportunities."

The new store increased Magnolia's store count in Los Angeles to three. Its first store opened in Santa Monica in August and a second opened in Torrance this month.