Best Buy Goes Dual Branding Route

Discussion
Oct 01, 2003
George Anderson

By George Anderson


Best Buy Co. is the largest consumer electronics retailer in Canada. It just happens that most of its sales are coming from its Future Shop business.


A couple of years back, when it acquired Future Shop for $377 million, it was assumed the parent company would re-brand the 91 stores it purchased under the Best Buy banner,
reports the Pioneer Press.


Instead, Best Buy decided to forego conventional wisdom and operate the two competing divisions separately and in at least one case, putting stores directly across the street
from one another.


Kevin Layden, president and chief operating officer of Best Buy Canada said opening a Best Buy across the street from a Future Shop in suburban Toronto resulted in a $4 million
drop in sales for the Future Shop. The Best Buy store’s $42 million in sales more than made up for the drop in the Future Shop location.


The chain has been able to operate the two brands successfully because, although both sell consumer electronics, the two stores carry different manufacturer lines.


“We made a deliberate attempt to give consumers a broader choice,’ said Tom Healy, president of Best Buy International. “That has allowed the brands to coexist and minimize
cannibalization (of Future Shop sales).’


Moderator’s Comment: What are your thoughts on Best Buy’s dual brand strategy in Canada?


According to the Pioneer Press story, Best Buy’s Canadian operations posted same-store sales increases of 4.1 percent in the last quarter.
[George
Anderson – Moderator
]

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