Bye bye, Best Buy
by Alan Treadgold
The recent news that Best Buy is to close its UK superstores is hardly a surprise but certainly causes pause for thought. As well as being very expensive to open in the first place, large superstores selling consumer electronics can lose a lot of money quickly and be horribly expensive to shut down. Sadly, this has been Best Buy’s – very expensive – lesson. Best Buy is a very capable retailer and its efforts to establish a superstore presence in the UK was a genuinely brave effort to bring something new and different to the UK retail scene and the UK shopper. History will doubtless deride Best Buy’s move into the UK to have been brave to the point of reckless. But this would be unfair. Certainly, their timing in entering the UK was, in hindsight, about as bad as it could get: selling big ticket electronic products in the teeth of one of the deepest recessions we have ever seen is about as tough as it gets. But Best Buy’s travails were more than bad timing or bad planning – depending on your point of view. Rather, it encapsulates very vividly some of the new fundamental rules of retailing in the UK.
As the old truism has it, the one thing better than learning from your mistakes is learning from other peoples. And so here are some lessons to be learned from Best Buy – at rather less than the £100m+ that they cost Best Buy itself:
- You can’t be quick when your business is superstore retailing. They take a long, long time to build and a long time to get up to speed. What may have seemed like a very good idea at the planning stage might be a terrible idea by the time the doors open. Whatever money you spend on scenario planning will look cheap compared to the cost of getting it wrong.
- Big box destination stores are very difficult and expensive to establish when the brand above the door and the product offer within it is largely unknown to your target shoppers. Think carefully about whether what you’re bringing into a market is different enough and differentiated enough from that which is already there.
- Spreading your new stores thinly across the country rather than concentrating them in a single region makes the task of establishing your brand and your identity even more difficult and expensive.
- Single format store-based retailing doesn’t work in the multi-channel worlds of connected shoppers. Especially when they’re buying electricals. A large number of conveniently located small stores acting as collection points and supporting a very strong web presence is the way to go to market in electricals retailing.
- Large superstores are definitely not the present – let alone the future – for electricals retailing in the UK.
