Best Practices

At a time when most retailers are still discussing the need to provide shoppers with a unique, relevant store environment, Best Buy is putting the theory in motion. The Richfield, MN-based chain last month rolled out the latest wave of stores featuring its groundbreaking "Customer Centricity" design strategy. These stores are designed to appeal specifically to one or two of the five shopper demographic segments that Best Buy is targeting: "Barry," the affluent professional who wants the best in technology and entertainment and demands excellent customer service; "Buzz," a young male who wants cutting-edge gadgets and entertainment; "Ray," the family man who wants practical technology that improves his life; "Jill," the busy suburban mom who is primarily shopping for her kids; and small-business owners (who don't get a cute moniker). The basic Customer Centricity format turns the chain's previous racetrack design into a wheel with a central hub and six "experience zones." At the center of the store is the entertainment zone, which is surrounded by zones for home theater, computers, mobile entertainment and appliances, along with the home base of the Geek Squad, Best Buy's in-house computer repair technicians. The exact look of each store, however, depends on the demographics of its own shoppers. Stores that target "Jill," for instance, feature a "Just for Kids" section offering children's products such as educational software, while locations targeting "Barry" include model living rooms filled with leather couches, plasma-screen TVs and top-of-the-line surround-sound systems. The localized strategy covers merchandising decisions as well; store managers are allowed to choose what products to showcase at the ends of aisles and in other prominent areas. After testing it for several years, Best Buy began implementing the concept in earnest in 2004, introducing it at 68 locations in California (see pictures). Results have been encouraging, according to the chain, with remodeled stores posting an 8.4% same-store sales increase -- three times that of traditional stores -- and ringing up $1,000 in average sales per square foot (versus $850 for the rest of the chain). Best Buy plans to remodel 150 to 200 stores in 2005 at a cost of about $50 million. The localized strategy also extends to Best Buy's marketing activity, as the retailer supplements its mass-media efforts with direct marketing, regional promotions and other refined tactics. Even seemingly large-scale promotions can have a focused goal, such as when the chain provided McDonald's with promotional prizes (in 2003 and 2004) in a bid to get more of "Buzz" into stores, or partnered on a similar campaign with grocer Kroger Co.'s Ralphs chain in 2005 to reach "Jill."As it continues to refine the standard store design, Best Buy also is experimenting with alternative concepts. In Minneapolis, it recently opened eq-life, a health-and-wellness store aimed at women that features a pharmacy, coffee bar and full-service salon in addition to health-technology products such as pedometers and heart-rate monitors. Female customers also are the target of Studio D, a boutique in Naperville, IL, that focuses on home electronics education. For hardcore tech addicts, Best Buy has unveiled Escape, a Chicago store that offers unique products and gaming stations at which customers can sample video games.

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