Best Buy 2006 Annual Report Download - page 20

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6
The Best Buy store format has evolved to includemore
interactive displays and, for certain products, ahigher level
of customer service, with the latest version designed to
increase labor efficiency andto improve merchandising. In
fiscal 2000, we introduced a small-market Best Buy store
concept that offers merchandise in the same product groups
as larger stores, with a product assortment tailored to each
respective community.
In fiscal 2000, we also established our first online shopping
site, BestBuy.com. Our “clicks-and-mortar” strategy is
designed to empower consumers to research and purchase
products seamlessly, either online or in our retail stores. The
BestBuy.com online shoppingsite offers expanded
assortments in all of ourprincipal product groups.
In fiscal 2001, we acquired Magnolia Hi-Fi, Inc. — a
Seattle-based, high-end retailer of audio and video
products and services — to access an upscale customer
segment. During fiscal 2004, MagnoliaHi-Fi began doing
business as Magnolia Audio Video.
In fiscal 2003, we acquired Geek Squad, Inc. (Geek
Squad). Geek Squad provides residential and commercial
computer support services. We acquired Geek Squad to
furtherour plans of providing technology support services to
customers. We have sinceexpandedGeek Squad service to
be available in all U.S. Best Buy stores, as well as in 12
stand-alone stores, with more than 12,000 agents. Our
goal is to build Geek Squad into North America’s largest
consumer provider of computer repair, support and
services, and we believe that overtime it will become a
significant component of our business.
In fiscal 2005, we opened our firstMagnoliaHomeTheater
store-within-a-store experience within a U.S. Best Buy store.
We believe Magnolia HomeTheater — with its high-end
brands, home-like displays and specially trained
employees — offers a unique solution forour customers.
The Magnolia Home Theater store-within-a-store experience
was offered in 107 and 23 U.S. Best Buy stores, at
February 25, 2006, and February 26, 2005, respectively.
In fiscal 2005, we converted 67 U.S. Best Buy stores to our
customer centricity operating model (segmented stores).
Segmented stores offer variations in product assortments,
staffing, promotions and store design, and are tailored
toward key customer segments. The segmented stores tailor
their store merchandising, staffing, marketing and
presentation to address specific customer groups, including
affluent professionalmales, young entertainment enthusiasts
who appreciate a digital lifestyle, upscale suburban moms,
families who are practical technology adopters and small
businesses.
During fiscal 2006, based on the segmented stores’
operatingresults, as well as positive customer feedback, we
continued to expand the roll-out of the customer centricity
operatingmodel. During fiscal 2006, we opened or
converted 233 U.S. BestBuy stores to the customer
centricity operating model. At the end of fiscal 2006, we
operated 300 segmentedstores, or 40% of total U.S. Best
Buy stores.
During fiscal 2007, weplan to transition all remaining
U.S. Best Buy stores to the customer centricity operating
model. We plan to add the Magnolia HomeTheater store-
within-a-store experience to approximately 200 U.S. Best
Buy stores and expand the products and serviceswe offer to
small businesses in at least 120 U.S. Best Buy stores in fiscal
2007. Further, we plan to refine our store and support
functions to an integrated operating model that supports
customer centricity.
At February 25, 2006, we operated742 U.S. Best Buy
stores in 49 states and the District of Columbia that
averaged approximately41,300retail square feet.
Collectively, U.S. Best Buy stores totaled approximately 30.6
million retail square feet at the endof fiscal 2006, orabout
90% of our total retail square footage. For fiscal 2006, U.S.
Best Buy retail stores generated average revenue of
approximately $38.9 million per store.
At February 25, 2006, we operated 20 MagnoliaAudio
Video stores in California, Washington and Oregon that
averaged approximately 9,700 retail square feet.
Collectively, Magnolia Audio Video stores totaled
approximately 194,000 retailsquare feet at the end of fiscal
2006, less than 1% of our total retail square footage. For
fiscal 2006, Magnolia Audio Video retail stores generated
average revenue of approximately $8.2 million per store.
International Segment
Our International segment was established in connection
with our acquisition of Canada-based Future ShopLtd. in
fiscal 2002. The Future Shopacquisition provided us with
an opportunity to increase revenue, gain market share and