Best Buy Research Paper

The roots of Best Buy Co., Inc. can be traced back to St. Paul, Minnesota. This is where founder Richard Schulze opened the doors of his Sound of Music store in 1966. Understanding a demand for consumer audio components and systems in the St. Paul area, Schulze managed to provide a combination of great prices and excellent service, thus building a strong customer base, which quickly prompted an expansion into home appliances and video products.

The eighties prompted change as well as the opening of Best Buy's first superstore. During 1983, a new corporate name was approved and the Sound of Music Company became known as Best Buy Co., Inc. With mounting consumer support Best Buy continued its road to expansion by opening an additional five stores. In 1985, the newly named company was being publicly traded under the symbol BBY. The late eighties brought forth additional change for the continuously growing company. Best Buy adopted a new concept in retail merchandising with the opening of massive superstores. The new concept shifted the placing of all inventory on the sales floor and hiring a specialized staff of non-commissioned service representatives (FAQ). Such adaptations have fueled the company into progression and continued to promote the company's corporate vision of "Making life fun and easy"(Fact Sheet).

Philanthropy plays a huge part in the success of Best Buy Co., Inc. During 1994, The Best Buy Children's Foundation was founded (FAQ). The foundation offers support to communities by way of contributions to several organizations found nationwide. This support strengthens communities by integrating interactive technology into everyday experiences. All of the programs funded by the Best Buy Children's Foundation are easily accessible to students. These programs also provide social services and disaster relief support in connection with non-profit organizations like the Red Cross and United Way. They also offer and support community volunteerism. Best Buy Children's Foundation also has a scholarship, which offers scholarships to students who have exceptional academic achievement and outstanding community service. Annually more than $2 million in scholarships are granted to over 1,300 students. The scholarships are evenly disbursed in each U.S. Congressional District and the District of Columbia. Three students who will be attending an accredited school are selected from each district and receive a scholarship for $1,000 or $2,000.

In recent years, Best Buy Co., Inc. has stretched its grasp to the international retail technology industry. Acquisition of Canada's largest existing consumer electronics retailer, Future Shop, spearheaded the international expansion in early 2001. This paved the path for the official launch of the Best Buy's independent label, Redline Entertainment. Within the Canadian sector two separate superstores exist, Best Buy (Canada) and Future Shop, both of which target a broad costumer base. Understanding the recognition and loyalty amongst Canadian consumers, Best Buy has continued the use of the Future Shop named superstores. Since the acquisition of the Future Shop, Best Buy Co. has expanded the Future Shop locations to its status of 114 stores across Canada. In addition to Future Shop stores, Canadian Best Buy stores have continued to expand within the past three years; numbering 30 to date.

The company truly extended itself worldwide in 2003 with the unveiling of a global sourcing office in Shanghai, China. Currently Best Buy operates three offices within China. They are located in Shanghai, Beijing, and Shenzhen. The primary function of the China locations is to buy the products in which Best Buy Co., Inc. sells. Over the next year and a half, Best Buy Co., Inc. is planning on opening what they refer to as "lab stores"(Best Buy Geeks Run amok). The company is taking every opportunity possible to acquire as much information it can about Chinese buying patterns prior to the expansion.

United States operations include the ownership and operation of two types of consumer electronics retail stores. These stores are designed to acquire the business of a large retail market. Each Best Buy location is quite large, ranging anywhere from 20,000 to 45,000 square feet (FAQ). Best Buy locations provide a familiar place to shop for any number of products targeted to meet the needs of a broad consumer base. As of February 26, 2005, Best Buy Co., Inc. reported 668 Best Buy stores in operation within the United States. In addition to the Best Buy stores the company operates, Magnolia Audio Video centers that are smaller locations fashioned to meet the needs of customers with high-end preferences. There are currently twenty Magnolia Audio Video locations in throughout America.

Best Buy Co., Inc. has recently released an expansion plan in which they plan to open additional smaller stores nationwide as well as in Canada. At this time there are approximately 673 Best Buy stores. This number is said to increase to about 1,000. Additionally, Future Shop stores will also be included in this new growth period. Future Shop stores are said to grow from 145 stores to approximately 200 (Best Buy Expansion Plans Include China). The new smaller stores are seen as being more profitable. With a 10% reduction in construction costs and the operating costs being much less, the new smaller stores will be much more profitable then the super stores that we are used to seeing. The growth period is said to last about 5 years and will not only include the new smaller stores, but also a transformation on the current stores.

Among the estimated 105,000 employees worldwide, Best Buy Co., Inc. enlists the expertise of a centralized marketing staff to purchase store merchandise (FAQ). Stationed at the company's corporate office in Richfield, Minnesota, this team is responsible for all aspects of merchandising; including assortment, pricing, and promotion. Product lines carried within store locations fall into four principal categories: consumer electronics, home office, entertainment software, and appliances. Consumer electronics including but not limited to TV's, DVD players, home theater systems, personal audio and video, cameras, mobile audio, satellite systems provide 39% of annual sales. Home office products such as computers, printers, paper, wireless communications, scanners, ink contributed to 34% of revenues. Providing 22% of the company's revenue, the entertainment software segment includes DVD's, CD's, video games, and computer software. Approximately 6% of the company's reported revenues results from the sales of appliances, which include all major household appliances, microwaves, vacuums, refrigerators, and more (FAQ). In addition to providing brand name products to the consumer