ANALYSIS: ‘Arrogant’ Best Buy was doomed from the start

It was in May 2008 when the world’s biggest electricals retailer announced its UK invasion.

The US giant spotted a gap in the market for its ambitious, big-box, customer service-based business model.With the help of Carphone Warehouse, the company thought it would be able to march onto our shores and show Dixons how it was done.

It couldn’t.

For starters, Dixons were never quite as bad as the media would have you believe. And Best Buy also made the mistake of giving its rivals time.

Troubled Beginnings

Back in May 2008, Best Buy announced it would be opening its first UK shops in the summer of 2009. Twelve months later, the company delayed its launch by another year.

This meant Best Buy lunged into the UK just as the country had limped out of a recession.It also gave rival electricals giant Dixons – under the new stewardship of John Browett – a full two years to prepare.Ahead of Best Buy’s first shop in Thurrock, PC World and Currys’ megastores emerged. Dixons had built their own big-box, customer-focused stores. And opened them right next to future Best Buy sites.

Carphone Warehouse and Best Buy were very arrogant back in May 2008 in thinking that there was a big gap in the electricals market for a service-based proposition,” said Arden Partners analyst Nick Bubb.Rubbishing the competition was a big mistake, as it enabled Dixons to galvanise Currys and PC World and raise their game before Best Buy arrived.

The losses have been embarrassingly large for Carphone Warehouse and the gap that they saw back in May 2008 in the electricals retail market for a new service-based proposition just doesn’t exist anymore.

The weak economy hasn’t helped, and there is too much over-capacity in the electricals market for Best Buy to survive.”In many respects Best Buy was doomed from the start. The company had joined a market where it wasn’t needed, in the middle of severe financial challenges.

Best of the Best

But Best Buy’s brief flirtation with the UK wasn’t without its mertis. The firm’s 11 shops were all excellent outlets, and unlike many of its electrical rivals, it cared about games.

Gaming received huge space in store, with demo pods, testing bays and a product range that included own brand peripherals and pre-owned titles. Games also featured heavily in the firm’s monthly magazine, and received dedicated customer support. Publishers could even use Best Buy stores to demonstrate their upcoming products.

It’s a shame to see any retailer disappear,” said Lygo’s Simon Johnson, who recently launched Turtle Beach booths in Best Buy’s UK stores.Best Buy has been very good to work with and has had a very positive and forward looking outlook with our Turtle Beach range.”

But for all its excellence as a store, Best Buy found out the hard way that you can’t just stroll into the UK and expect to win. Even if you are a US multi-billion dollar super retailer.

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THE RISE AND FALL OF BEST BUY

May 2008: Best Buy signs a 1.1bn joint venture with Carphone Warehouse to open some 100 shops in the UK by 2013. The first shops are due to open during the summer of 2009.

March 2009: Best Buy’s UK launch is delayed until 2010, giving Dixons, Comet and even Tesco time to prepare.

May 2010: Best Buy finally opens its first UK store in Thurrock, Essex. Opening day sales are the biggest ever for a Best Buy store anywhere in the world.

August 2010: Entertainment boss Marc Spence departs.

November 2010: Best Buy opens its UK online store.

February 2011: Chief exec Scott Wheway, marketing boss Kevin Styles and commercial director Harry Parmar all step down. Online managing director Devere Forster left the month before.

June 2011: Best Buy UK posts a 62m loss, triple than what was seen in 2010 and 12m worse than estimates. Company freezes further roll-outs and re-evaluates its plans.

November 2011: Best Buy announces it will retreat from the UK market and close all 11 stores.