Best Buy 2011 Annual Report Download - page 9

upon the distribution centers for inventory storage and the shipment of most merchandise to our stores or customers.
Large merchandise, such as major appliances, is generally fulfilled directly to customers through our distribution centers
and warehouses.
Merchandise for our Best Buy branded stores in China is shipped directly from our suppliers to our distribution center in
Shanghai. Our Best Buy branded stores in China are dependent upon the distribution center for inventory storage and
shipment of most merchandise. However, in order to meet release dates for selected products and to improve inventory
management, certain merchandise is shipped directly to our stores from manufacturers and distributors. In certain
circumstances, merchandise is shipped directly to our customers from manufacturers and distributors.
Our Best Buy branded stores in Mexico and Turkey have distribution methods similar to that of our U.S. Best Buy stores.
Suppliers
Our strategy depends, in part, upon our ability to offer customers a broad selection of name-brand products and,
therefore, our success is dependent upon satisfactory and stable supplier relationships. In fiscal 2011, our 20 largest
suppliers accounted for just under 65% of the merchandise we purchased, with five suppliers — Apple, Samsung, Sony,
Hewlett-Packard and Toshiba — representing 39% of total merchandise purchased. The loss of or disruption in supply
from any one of these major suppliers could have a material adverse effect on our revenue and earnings. We generally
do not have long-term written contracts with our major suppliers that would require them to continue supplying us with
merchandise. We have no indication that any of our suppliers plan to discontinue selling us merchandise. We have not
experienced significant difficulty in maintaining satisfactory sources of supply, and we generally expect that adequate
sources of supply will continue to exist for the types of merchandise we sell.
We operate a global sourcing office in China in order to design, develop, test and contract manufacture our own line of
exclusive brand products in association with factories in Asia.
Store Development
The addition of new stores has played a significant role in our growth and success. Our store development program has
historically focused on testing stores in new markets; adding stores within existing markets; and relocating, remodeling and
expanding existing stores in order to offer new products and services to our customers. We actively monitor our existing
store portfolio, and where necessary, take steps to grow, modify, enhance, relocate or close those stores based on our
judgment of future potential returns.
In our Domestic segment, we will continue to focus on enhancing existing stores to target high growth value propositions,
increasing our presence in small-format stores like Best Buy Mobile, and moderating large-format store square footage
growth. In our International segment, store investments will focus on growth areas such as Five Star in China, as well as
selectively expanding the number of Best Buy branded stores in the relatively new markets of the U.K. and Mexico.
Domestic Segment
During fiscal 2011, we opened 134 new stores and closed seven stores in our Domestic segment. We offer Geek Squad
support services and the Best Buy Mobile store-within-a-store experience in all U.S. Best Buy stores.
9