Best Buy 2005 Annual Report Download - page 18

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PART I In fiscal 2000, we established our first online shopping
Item 1. Business. site, BestBuy.com. Our ‘‘clicks-and-mortar’’ strategy is
designed to empower consumers to research and
Description of Business purchase products seamlessly, either online or in retail
We are a specialty retailer of consumer electronics, stores. The BestBuy.com online shopping site offers
home-office products, entertainment software, appliances products in all of our principal product groups.
and related services. We operate retail stores and
The Best Buy store format has evolved to include more
commercial Web sites under the brand names Best Buy
interactive displays and, for certain products, a higher
(BestBuy.com and BestBuyCanada.ca), Future Shop
level of customer service, with the latest version designed
(FutureShop.ca), Magnolia Audio Video
to increase labor efficiency and to improve
(MagnoliaAV.com) and Geek Squad (GeekSquad.com), as
merchandising. In fiscal 2000, we introduced a small-
well as an outlet store on eBay.
market Best Buy store concept that offers merchandise in
Our vision is to make life fun and easy for consumers. the same product groups as larger stores, with a product
Our business strategy is to bring technology and assortment tailored to each respective community.
consumers together in a retail environment that focuses on
educating consumers on the features and benefits of During the fiscal year ended February 26, 2005, we
technology and entertainment products, while maximizing converted 67 existing U.S. Best Buy stores to our customer
overall profitability. We believe our stores offer consumers centricity operating model. Stores operating under the
meaningful advantages in store environment, product customer centricity model, also referred to as segmented
value, product selection and customer service, all of which stores, offer variations in product assortments, staffing,
advance our objectives of enhancing our business model, promotions and store design, and are tailored toward key
gaining market share and improving profitability. We customer segments. The segmented stores tailor their store
believe that our four strategic initiatives (customer merchandising, marketing and presentation to address
centricity, efficient enterprise, win with service and win in specific customer groups, including affluent professional
entertainment) will further enhance our business model. males, young entertainment enthusiasts who appreciate a
Additional information on our strategic initiatives is digital lifestyle, upscale suburban moms, families who are
included in Item 7, Management’s Discussion and Analysis practical technology adopters and small businesses with
of Financial Condition and Results of Operations, of this fewer than 20 employees. During fiscal 2006, we plan to
Annual Report on Form 10-K. open or convert 150 to 200 additional U.S. Best Buy
stores to the customer centricity operating model, while
U.S. Best Buy rolling out key elements of customer centricity to all of our
other U.S. Best Buy stores. Further, we are planning to
We were incorporated in the state of Minnesota in 1966
complete the conversion of all of our U.S. Best Buy stores
as Sound of Music, Inc., and changed our name to Best
to the customer centricity operating model within three
Buy Co., Inc. in 1983. We began as an audio
years.
components retailer and, with the introduction of the
videocassette recorder in the early 1980s, expanded into
Magnolia Audio Video
video products. In 1983, we revised our marketing
strategy and began using mass-merchandising techniques, In fiscal 2001, we acquired Magnolia Hi-Fi, Inc., a
which included offering a wider variety of products and Seattle-based, high-end retailer of audio and video
operating stores under a ‘‘superstore’’ concept. In 1989, products to access an upscale customer segment. During
we dramatically changed our method of retailing by fiscal 2004, Magnolia Hi-Fi began doing business as
introducing a self-service, noncommissioned, discount-style Magnolia Audio Video. We believe the new name and
store concept designed to give the customer more control
over the purchasing process.
2