Best Buy’s CEO, Hubert Joly, has resolutely argued that Best Buy has a place in a world that is increasingly dominated by e-commerce and massive online sales.  Best Buy’s stores are changing.  Best Buy is now rolling out Samsung Shops within its stores.  These shops are spacious, with minimalist design, and laptops and tablets propped up for customers to try them out.  The shops will sell all Samsung phones, laptops, tablets, and accessories and will be staffed with Samsung consultants.

Joly stated that Best Buy stores are trying to become more efficient; the Samsung shops are part of this strategy.  The increased shop-in-shop space will provide increased floor space for more profitable items while forcing Best Buy to trim the weaker parts of its portfolio like CD’s and DVD’s which have rapidly shrinking profit margins.

Less than a year ago, Best Buy unveiled a new prototype store that took design elements from Apple.  However, Joly has since decided to halt the expansion because of the “significant investment” on a per-store basis.

Retailers have long used the shop-in-shop to create branded experiences in stores.  Sometimes this is very successful.  Other retailers, like J.C. Penney have failed to effectively implement shop-in-shops.  Joly believes that the Samsung shops are going to be a bright part of Best Buy’s future.

 

Discussion Question:

What are the advantages and disadvantages of the Samsung/Best Buy partnership from the perspective of both Best Buy and Samsung?

 

SOURCE: Kim Bhasin, Huffington Post, April 25, 2013