Best Buy builds computers, entertainment software into mega categories - Computer Product Retailing - Company Profile

Discount Store News, Jan 2, 1995 by Pete Hisey

According to Sousa, the increasing quality of games coming on the market has improved sales steadily. "There's just so much good stuff available now," he noted. Hot sellers entering the Christmas season include Under a Killing Moon from Access, a four-CD mystery movie starring Margot Kidder and Brian Keith; Siberia from Interplay; the X-Wing Collectors CD from Lucas, whose upgraded graphics are getting original players to repurchase the game: NASCAR Racing from Papyrus; Front Page Football; Rise of the Robots; and U.S. Navy Fighters.

"Under a Killing Moon is just blowing off the shelf," he noted. "But a lot of titles are moving in quantities we've rarely seen before." Doom II, even after two months on-shelf, continues to be one of Best Buy's best sellers, he added.

And that kind of action, of course, is what Best Buy was looking for when it got into the computer business in the first place. Computers as a whole are low-margin (chain president Anderson just grimaced when asked recently how hardware margins were holding up) and high-risk. Technology changes so rapidly that today's hot system may be totally unsaleable in just two months. But software, accessories and upgrades all command strong margins; Best Buy gets well over 30% on software, compared to as little as 5% on entry-level multimedia systems, and rarely more than 20% on more advanced and expensive goods.

And, just as in music and video, software keeps customers coming back, giving Best Buy that many more times to tempt them into another hardware sale ... and to firmly develop shopping habits in younger consumers.