Already a Bloomberg.com user?
Sign in with the same account.
The world's largest electricals retailer, Best Buy (BBY), will open its first UK store in Essex to a fanfare tomorrow, but consumers will have to wait until the autumn to buy anything online.
Best Buy had originally intended to introduce e-commerce at the time of opening its first tranche of UK stores this spring in order to maximise the impact of its launch.
But a Best Buy spokeswoman yesterday said: "We want to make sure our online store is comprehensively tested and meets our exacting standards. It will launch later in the year."
She added that when it launches its transactional website in the autumn, "customers across the UK will be able to receive deliveries from Best Buy".
Given that Best Buy will only have five stores in the UK by the autumn, the delay in launching e-commerce will not make a significant difference to its revenues over the coming year.
But transactional websites are a critical weapon in the armoury of all UK electricals retailers, and Best Buy will not want any further delays, as there is an inexorable shift of sales on to the internet.
The European electricals group DSGi (DSITY), which owns Currys and PC World in the UK, said that online sales currently account for between 12 per cent and 15 per cent of total sales and its internet sales passed £1bn in 2008. Other electricals rivals Comet (KESAF), Argos (HMRLF), and Tesco (TSCDY) already have bulging online sales.
The first Best Buy UK store, a 50,000 sq ft big-box in Thurrock, Essex, is one of the most eagerly-anticipated launches in recent years. The store will sell a smorgasbord of electricals products, from 3D-TVs to electric cars, in its green technology section.
The US giant first announced its intention to enter the UK market with the £1.1bn acquisition of 50 per cent of Carphone Warehouse's retail division in May 2008. In addition to Thurrock, Best Buy has confirmed five sites. The next two, in Hedge End, Southampton, and Merry Hill, West Midlands, will open in June, followed by another in Aintree, Liverpool, and Croydon, Surrey, in the autumn.
It will also launch in Cribbs Causeway, Bristol, in spring 2011, as part of up to 10 in its first year. But questions have been raised about whether Best Buy will hit its target of up to 80 UK stores by 2013, given that this implies a run rate of opening more than 20 a year.
Kate Calvert, the analyst at Shore Capital, said: "It is quite clear they are struggling to get sites. Quality sites are not readily available in the UK."
Best Buy will focus heavily on customer service, both in-store and remotely through its existing 24-hour home computer support service, Geek Squad.
As Best Buy gave its rivals two years to prepare for its assault on the UK, Currys and Comet have been able to up their game. For instance, DSGi has stepped up its roll-out of Currys megastores, as well as combined Currys and PC World branches, and invested in customer service. Last month, DSGi said it would open 25 new "megastores" by Christmas. In fact, Currys has opened one just 100 metres from the Best Buy shop at Thurrock. DSGi has also invested in staff training as part of its renewal and transformation plan.
Best Buy plans to recruit up to 8,000 people over the next five years, most of whom will make up its "blue shirt" in-store team. The staff will receive a nine-week training programme at the "Blue Shirt Academy", including a focus on product knowledge and customer service.
But industry experts believe the impact of Best Buy in the UK will not be significant for a number of years.
Ms Calvert said: "Until we have seen what the full Best Buy proposition will be in terms of other stores, the website and how it will be integrated with stores, pricing and promotional activity, we will not know what the impact will be on the market."
Following its demerger from its Talk Talk (TALK:LN) broadband division last month, Carphone Warehouse (CPW:LN) now has a 50 per cent stake in Best Buy Europe, which includes the Best Buy, Carphone Warehouse and The Phone House branded stores in the UK and Europe, and Carphone's mobile phone shops in Best Buy's US stores.
from London, for Independent minds