When a retailer becomes very strong in their home market they can become emboldened to believe that their format has great international appeal & move overseas. Best Buy is one such retailer, initially very slow to internationalise, then in recent years a lot of talk of their ambition including opening 80 large out of town stores in the UK. Quite why the UK market was chosen remains a mystery to me – it is a highly competitive market with large established players in the form of Dixons & Comet, and a market in which increasingly sales are moving to inevitably cheaper on-line retailers spearheaded by Amazon. So in the UK they have entered a competitive and shrinking market!
Just last week came the news that Best Buy will withdraw from 9 stores in China & their entire estate of 2 stores in Turkey. Does this represent a ‘failure’ in these markets, or the emergence of better investment opportunities? Given the scale of Best Buys resources I don’t think that these withdrawals will provide significant new sources of investment capital & so we have to put it down to returns in these stores not matching expectations – expectations presumably then that weren’t realistic or well enough researched? I do hope the UK market follows the same course, whatever happens given their slow start in the UK, the ambition for 80 stores now does not seem likely to be realised.
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