Cutting Room: £45 million between friends

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The belated launch of Best Buy Europe is not something that should worry its joint venture partner Carphone Warehouse. Nor should Carphone worry about the £45 million start-up cost the megastore is investing.

The successful launch of the UK’s first Best Buy store (at West Thurrock Retail Park) is indicative of its aspiration to become one of the UK’s best-known High Street names.

 Judging by the crowds who swarmed to the West Thurrock opening day (a year behind schedule) Best Buy’s point of differentiation is a marked improvement and a welcome asset for the mobile and consumer electronics industry.

For years this market has been tainted by misselling of extended warrantees and sales staff’s woeful ignorance around the latest devices.
But Best Buy staff undergo a rigorous nine-week training session and, when put to the test, certainly deliver. 

Although staff are designated to one of eight departments in store, staff are fully aware of all stock available and provide an impressive spiel to customers, as exemplified by salesman Paz in the Mystery Shopper special (click here).

Walk in to a Currys store, and it’s unlikely you’ll encounter a staffer clued up on specific product information without reading from merchandising material.

The point here is that Best Buy has raised the bar when it comes to staff training. This does mean that Carphone’s store staff require a refresh in their training to now bring them up to scratch.

It would be pretty embarrassing if the new kid outshone the expertise of Carphone’s shop staff.

Best Buy will have highly competitive pricing. The West Thurrock branch launched with a number of launch day specials but it is expected that Best Buy will undercut Currys on a number of key propositions, helped in part by its current distribution partnerships through its US suppliers and the prices Carphone enjoys in the UK.

It is unlikely also that Carphone is cannibalising its own customer base.

Mobile pricing is identical in both Carphone and Best Buy stores although Best Buy offers Carphone the opportunity to cross-sell into its existing base as well as have access to customers which it would not be able to target previously.

The Best Buy Europe venture is a serious assault on the incumbent players. Surely Currys must be worried as Carphone rolls out the branches throughout the rest of the country over the coming months.

 

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