Best Buy 2005 Annual Report Download - page 21

Best Buy store employees are noncommissioned, and
Magnolia Audio Video the stores offer more interactive displays and
Magnolia Audio Video stores are typically managed by a grab-and-go merchandising. This design allows the
store manager, an audio/video sales manager and, if the customer to drive the transaction as they experience the
store contains mobile products, a mobile electronics sales products themselves, with store employees available to
manager. Magnolia Audio Video stores are generally demonstrate and explain product features.
open 72 hours per week, seven days a week. Depending
Store size — At the end of fiscal 2005, the average
on an individual store’s volume and product offerings,
Future Shop store was approximately 20,500 retail
store staffing includes seven to 27 commissioned sales
square feet, compared with an average of
personnel, one to six commissioned mobile electronics
approximately 27,000 retail square feet for Canadian
installers and one to seven sales support staff personnel.
Best Buy stores. Canadian Best Buy stores generally
Corporate management for Magnolia Audio Video stores
have wider aisles, as well as more square footage
centrally controls advertising, merchandise buying and
devoted to entertainment software. Further, Canadian
pricing, as well as inventory policies.
Best Buy stores do not carry appliances.
International Segment
Operations
Overview
International stores use a standardized operating system.
At February 26, 2005, we operated 114 Future Shop The operating system includes procedures for inventory
stores throughout all Canadian provinces and 30 management, transaction processing, customer relations,
Canadian Best Buy stores in Ontario, Alberta, British store administration, staff training and performance
Columbia, Manitoba and Saskatchewan. Collectively, appraisal, as well as merchandise display. Advertising,
International stores totaled approximately 3.1 million retail merchandise buying and pricing, and inventory policies
square feet at the end of fiscal 2005, or about 10% of are centrally controlled.
our total retail square footage. For fiscal 2005,
During fiscal 2005, we introduced a new labor model
International retail stores generated average revenue of
within selected Future Shop stores. The new model
approximately $21.1 million per store.
provides more efficiency by creating balance between the
The dual-branding strategy allows us to retain Future sales and operational aspects of our business through the
Shop’s brand equity and attract more customers by addition of supervisory positions and the realignment of
offering a choice of store experiences. As we expand the management team roles. The new labor model retains the
presence of Best Buy stores in Canada, we expect to gain core Future Shop commissioned sales environment, while
continued operating efficiencies through the leveraging of adding an hourly paid sales and merchandising team.
our capital investments, supply chain management,
International store operations are organized to support
advertising, merchandising and administrative functions.
two brands, each headed by a vice president. Each vice
Our goal is to reach differentiated customers with each
president has regional management who closely monitor
brand by giving them the unique shopping experiences
store operations and meet regularly with store managers
they desire. The primary differences between our two
to review management and staff training programs,
Canadian brands are:
customer feedback and requests, store operating
In-store experience — The customer’s interaction with performance and other matters. Meetings involving store
store employees is different at each of the two brands. management, product managers, advertising, financial
Future Shop stores have commissioned sales associates and administrative staff, as well as senior management,
who take a more proactive role in assisting customers. are held quarterly to review operating results and to
Through their expertise and attentiveness, the sales establish future objectives.
associate drives the transaction. In contrast, Canadian
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