Best Buy expands with mobile phone shops in malls

“At a time when many retailers are settling into a recession crouch, Best Buy Co. is expanding with smaller stores selling mobile phones — a crucial shift for the big-box electronics retailer,” Miguel Bustillo reports for The Wall Street Journal. “The Best Buy Mobile stores leverage a costly partnership with Carphone Warehouse Group PLC, Britain’s largest independent phone retailer. The up to 3,000-square-foot stores, are going up in shopping malls and urban downtowns — unlike its 40,000-square-foot warehouse-style stores.”

“Retail and phone industry analysts are mixed on whether the concept will work in the U.S. But most agree that Best Buy has little choice. ‘They have to sell those devices to protect their basic franchise,’ says Stephen Baker, vice president of industry analysis at researcher NPD Group,” Bustillo reports. “Smartphones are ‘one of the few growth areas in the market,’ he said.”

“Best Buy has opened 41 Best Buy Mobile stores in the U.S. and three in Canada so far. The company also has added store-within-a-store Best Buy Mobile sections to its nearly 1,000 U.S. warehouse stores. The stores sell 90 different phones and services from nine carriers [including Apple’s iPhone 3G],” Bustillo reports. “Best Buy declined to detail how many Mobile stores it planned to open in 2009, but said the format should get support even as the company tightens capital expenditures in expectation that the bad economy will linger. The Richfield, Minn., retailer estimates its U.S. mobile phone share over the last quarter of 2008 grew to 3.2%, compared with 1.9% a year earlier, largely due to the Best Buy Mobile sections in its big-box stores. It aims for a 10% share within a few years, the company said.”

Full article here.

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