Concept III changes script for Best Buy's L.A. story - Best Buy Company Inc. opens store in Los Angeles, California

Discount Store News, Dec 5, 1994 by Pete Hisey

HAWTHORNE, CALIF. -- Best Buy stormed into the Los Angeles market Nov. 11, debuting the first seven full versions of its Concept III stores. "We've been looking at this market ever since Concept II," said president Brad Anderson, "because it has the best retail climate in the U.S."

Despite upgrades and expansion by market rivals like Circuit City and Adray's of L.A., Los Angeles is vastly understored in the consumer electronics category. To Anderson, though, that might be irrelevant. "If your store is compelling enough, it will succeed," Anderson said.

And Concept III is highly compelling. At 58,000 sq. ft., the megastore is much brighter than its predecessor, with natural light pouring through a massive transom over the main entrance. Apart from the racetrack, the entire store is carpeted and the color scheme has been subdued, with different colors signifying various product categories.

Most of the new space--about half of the 13,000 sq. ft. added to the most recent Concept II stores--went to software, with music growing to 65,000 skus from 45,000 and software doubling to about 2,000 skus. The remainder was given back to the customer in the form of wider aisles and added showrooms in the store.

The real innovation had little to do with merchandise or aesthetics. The company installed 12 interactive information stations that can, when fully operational, deliver brief descriptions of each feature of each product carried by Best Buy. Most take the form of brief animated or full-video clips of about 12 seconds.

The kiosk also contains photos of each product, comparing features and that day's price head to head. A customer interested in a multimedia computer, for instance, can scan through all 35 skus in a minute or so, and print out the entire list in a few seconds.

According to senior vp Randy Zanatta, the answer center doubles as a training tool for associates. A secret hot button on the screen allows access to in-depth sku information, in-stock status and technical specifications. "Every associate at every store will be getting the same information," Zanatta said. "That will make us more accurate and credible."

Prices are downloaded from corporate offices five times a day, keeping all information current, and discontinued items disappear from the menu as soon as the last piece in each store is sold. Consumers tended to approach the kiosk with a bit of trepidation at first, but by the end of the day, most were in steady use.

According to chairman Richard Schulze, the kiosks mark a progression in Best Buy's mission to turn the electronics business back over to the customer. When the company axed sales-floor commissions, Schulze said that he was putting the customer in charge of the transaction, flipping the sales impetus from what was in the salesperson's best interest (in the form of higher margin or special commission bonuses) to what was in the customer's best interest.

The kiosks, he said, take the Concept I step further, putting information that had been the sole preserve of the sales staff directly into the hands of the customer in simple, easy-to-understand terms. That, he said, will lead to more confidence on the part of the shoppers, resulting long term in increased sales, although the chain may in some cases give up a sale that day by removing sales pressure.

Competitors were holding their breath, expecting the opening to mark a brutal price war, something the L.A. market has never experienced before, at least not on the level of New York or Dallas. Most were relieved when the Best Buy circular stuck to a few limited-quantity grand opening specials (a 20-in. Sharp stereo TV for $189, an RCA 4-head VCR for $197, a Packard Bell 486 DX2/50MHz multimedia computer with monitor and printer for $1,498) and a standard 110% price guarantee. Seven of the eight pages in Best Buy's grand opening circular didn't even mention specific prices (apart from the new $39-or-less price on all extended service contracts of four years or less), and on-shelf prices were competitive with area retailers, but not greatly lower.

The circular instead emphasized hassle-free shopping, interactive answer centers ("the store you can play with"), everyday low prices, store events like a Nintendo Pup Trailer and in-store drawings, on-site services like computer upgrading, software training and car stereo installation, and a four-page, fold-out illustrating the size of the store.

Similarly, market television advertising emphasized depth of selection, no-commission sales, brand names, and, in its choice of models, female-friendly sales help. Low prices are treated as a given.

The opening was the company's most successful ever in a new market, communications director Laurie Bauer said, with 800 or more customers rushing each store at the grand opening. In per-store volume, the L.A. invasion has been bested only once, at an unnamed existing market.