Month: october

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Best Buy is a retailer that in the 90’s was thought to be hurting the music industry, but today it is a whole different story. Best Buy is standing as one of the best retailers for physical product, and with them taking over Napster they now have the chance to make waves online to strengthen their online sales. Best Buy is a company that is trusted by the industry and is working closely with them to keep that trust. Best Buy has decided to price all their CD’s at $9.99 at three different locations to prove to the industry that it is the best way to go. The great part about it is that they are willing to take a hit themselves if need be to show the industry its point of view. Over all, Best Buy is a company that still stocks great music and buys product to best fit its consumers in each market that its stores are in. They also have great marketing strategies, and even though some areas of their business may not be the strongest they still are at the top of the list always making improvements and communicating with industry leaders to provide consumers with what they are looking for at the price the are willing to pay and can afford.

Month: September

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There has been a lot of speculation as to why Best Buy purchased the struggling Napster for $121 million. The truth is that Best Buy is using the acquisition as a part of a broader platform to offer digital content and to leverage its market share in consumer electronics by bundling services that bring in recurring monthly revenue. They have already done this over the past few years with services like TiVo, DirecTV, and XM Radio. With Napster, Best Buy can persuade makers of consumer electronics like stereos, TVs, and computers to embed the service in their products in return for better shelf space and promotional support. They already have a lot of leverage in this area. Best Buy also may expand the platform beyond music, to movies and other digital content. An area to watch is mobile phones. The store recently opened new Mobile Shops and is experiencing increased mobile phone sales by 50%. If Best Buy increases its market share in this sector, it could wield the same leverage over mobile phone manufacturers and wireless operators to include Napster mobile services. Major labels are very excited about the acquisition and see it as a great way to drive sales in new ways on a lot of devices.

Month: September

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After three years of research and experimentation, Best Buy has announced its rollout of musical instrument stores. By the end of the year, there will be 75 to 85 music stores located within existing locations. Each of these will be a store-within-a-store, taking up 2,500 square feet, and carrying over 1,000 musical instrument-related products from brands like Fender, Gibson, Yamaha, Roland, Drum Workshop, and more. Woodwinds, brasswinds, and violins will not be stocked. A sales team of five to seven will staff the area, and will provide group and individual lessons. The store is primarily targeting novice to intermediate musicians and buyers, but it will carry a fairly broad selection of guitars that are priced up to $3,200. They are also looking to cater to the church market, as their clean-cut image will be more suitable for a minister rather than other rock 'n' roll stores. These products will also be available at bestbuy.com. Separate rooms for playing drums, amps, and acoustic guitars will be available. The sound will be somewhat muffled, but bleeds into the retail floor with the purpose of drawing in more customers. Rock Band and Guitar Hero displays will also be located close to the musical instrument section to create more traffic. The idea for all of this originated with the company's research arm, the Customer Centricity division. After looking at purchasing patterns, focus groups, instore interviews, online surveys and more, the team tried to find a "homogeneity of needs." A sizable number of customers who were purchasing consumer electronics, home appliances, and software also voiced their interest in seeing a more extensive musical instrument selection at the store. This prompted them to open their first music store in Riverside, California in 2006. Others believe that the company is getting into this business because of the higher profit margin. Currently, Best Buy's margin is 23% in comparison to the low 30% range typical among music retailers. Regardless, Best Buy says they are looking for growth in this sector.