Best Buy 2013 Annual Report Download - page 7

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In Canada, the Future Shop and Best Buy branded stores have offerings in Consumer Electronics, Computing and Mobile
Phones, Entertainment, Services and Other, and at Future Shop only, Appliances. Although Future Shop and Best Buy branded
stores in Canada offer similar products, there are differences in brands and depth of selection. Further, Geek Squad services are
only available in the Best Buy branded stores, with Future Shop's service offerings branded as Connect Pro. Best Buy Mobile
offerings in Canada are similar to those offered in our U.S. Best Buy Mobile stores.
In China, our Five Star stores have offerings in four revenue categories: Appliances, Consumer Electronics, Computing and
Mobile Phones and Services. The products and services in these revenue categories are similar to those of our U.S. Best Buy
stores.
Our stores in Mexico have offerings in six revenue categories: Consumer Electronics, Computing and Mobile Phones,
Entertainment, Appliances, Services and Other, with products and services similar to those of our U.S. Best Buy stores.
Distribution
Domestic Segment
U.S. Best Buy online merchandise sales generally are either picked up at U.S. Best Buy stores or fulfilled directly to customers
from our distribution centers. Most merchandise for our U.S. Best Buy, U.S. Best Buy Mobile, Magnolia Audio Video and
Pacific Sales stores is shipped directly from manufacturers to our distribution centers or warehouses located throughout the
U.S. In order to meet release dates for certain products, merchandise is shipped directly to our stores from suppliers. Contract
carriers transport merchandise from distribution centers and warehouses to stores, though for some Appliances products
merchandise is transported directly to customers.
International Segment
The Carphone Warehouse and The Phone House stores' merchandise is shipped directly from our suppliers to distribution
centers across Europe. Contract carriers ship merchandise from distribution centers to stores.
Our Canada stores' merchandise is shipped directly from our suppliers to our distribution centers. In order to meet release dates
for selected products, certain merchandise is shipped directly to our stores from suppliers. Contract carriers ship merchandise
from distribution centers to stores.
We receive our Five Star stores' merchandise at nearly 40 distribution centers and warehouses located throughout the Five Star
retail chain, the largest of which is located in Nanjing, Jiangsu Province. Our Five Star stores are dependent 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.
Our stores in Mexico have distribution methods similar to that of our U.S. Best Buy stores.
Suppliers and Inventory
Our business is to distribute a broad selection of products, predominantly from third-party suppliers. We work with a variety of
suppliers and in fiscal 2013 (11-month), our 20 largest suppliers accounted for just under 70% of the merchandise we
purchased, with 5 suppliers – Apple, Samsung, Hewlett-Packard, Sony, and LG Electronics – representing approximately 45%
of total merchandise purchased. We generally do not have long-term written contracts with our major suppliers.
We carefully monitor and manage our inventory levels to match quantities on hand with consumer demand as closely as
possible. Key elements to our inventory management process include the following: continuous monitoring of historical and
projected consumer demand; continuous monitoring and adjustment of inventory receipt levels; agreements with vendors
relating to reimbursement for the cost of markdowns or sales incentives; and agreements with vendors relating to return
privileges for certain products.
We also have a global sourcing operation to design, develop, test and contract manufacture our own line of exclusive brand
products.
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