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Savings Experiment: Snow RemovalSimilar to discounter Wal-Mart Stores, Inc. (NYSE: WMT), Best Buy grew in the 1990s by using the "big box" strategy of having all merchandise in its stables under one large roof. In effect, the "one stop shop" mentality, although Best Buy's was limited to consumer electronics more than any other category. These are different times, and consumer niches are now the fuel for growth. As such, the nation's largest consumer electronics retailer is opening newer stores in markets it already serves that tailor product selections to the surrounding consumer demographics.
In some cases, providing only niche stores can kill you. But, when you add niche stores to the mix with "do everything" locations in the same market, things have a tendency to work out rather well.
Best Buy CEO Brad Anderson started opening stores in the Dallas area three years ago, boosting store count by 50%. When existing store sales did not fall as much as anticipated, he began rolling out the customized store addition strategy to other markets as part of a larger experiment. If you're a tech geek, soccer mom or music lover, these newer stores featured internal organization and layout that catered to your specific tastes (among others).
Anderson has been quoted as saying: "we got better revenue out of those stores than we expected ... if you differentiated the store for the community it was in, then you didn't get the cannibalization.''
Other retailers, if they are smart, are looking at a similar strategy. It's not the end of the "big box" concept, but giving customers the customized experience they now require does indeed entail different thinking about merchandising.
Anderson has been quoted as saying: "we got better revenue out of those stores than we expected ... if you differentiated the store for the community it was in, then you didn't get the cannibalization.''
Other retailers, if they are smart, are looking at a similar strategy. It's not the end of the "big box" concept, but giving customers the customized experience they now require does indeed entail different thinking about merchandising.
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