Best Buy 2015 Annual Report Download - page 12

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Table of Contents
5
Domestic Segment
Merchandise selection, pricing and promotions, procurement and supply chain, marketing and advertising, and labor
deployment across all channels are centrally managed at our corporate headquarters. In addition, support capabilities (e.g.,
human resources, finance and real estate management) are generally performed at our corporate headquarters. We also have
field operations that support retail teams. Our retail stores have procedures for inventory management, asset protection,
transaction processing, customer relations, store administration, product sales and services, staff training and merchandise
display that are largely standardized within each store brand. All stores within each store brand generally operate under
standard procedures with a degree of flexibility for store management to address certain local market characteristics.
International Segment
Our Canada store operations are similar to those in our Domestic segment, with centrally controlled advertising, merchandise
purchasing and pricing, and inventory policies. In addition, corporate management performs support capabilities. Similar to our
U.S. Best Buy stores, all Canada stores use a standardized operating system that includes procedures for inventory
management, transaction processing, customer relations, store administration, staff training and merchandise display. The retail
operations include two principal store brands. Future Shop stores have predominantly commissioned sales associates, whereas
employees in Best Buy branded stores in Canada, like employees in U.S. Best Buy stores, are noncommissioned.
In March 2015, we made a decision to consolidate Future Shop and Best Buy stores and websites in Canada under the Best Buy
brand. This resulted in permanently closing 66 Future Shop stores and converting 65 Future Shop stores to the Best Buy brand.
Our stores in Mexico employ an operating model similar to that used in our U.S. Best Buy stores.
Merchandise and Services
Our Domestic and International segments have offerings in six revenue categories: Consumer Electronics, Computing and
Mobile Phones, Entertainment, Appliances, Services and Other. Consumer Electronics consists primarily of television and
home theater, digital cameras and camcorders, DVD and Blu-ray players; portable electronics such as MP3 devices,
headphones and speakers, car stereo, navigation and satellite radio, and all related accessories. The Computing and Mobile
Phones revenue category includes notebook and desktop computers, mobile phones and related subscription service
commissions, tablets and all related accessories. The Entertainment revenue category includes video gaming hardware and
software, DVDs, Blu-rays, CDs, digital downloads and computer software. The Appliances revenue category includes both
large and small appliances and kitchen and bath fixtures. The Services revenue category consists primarily of extended
warranty service contracts, technical support, product repair, delivery and installation. The Other revenue category includes
non-core offerings such as snacks and beverages.
The merchandise and service offerings vary across our stand-alone store portfolio, with U.S. Best Buy Mobile, Magnolia Audio
Video and Pacific Sales stores offering a more focused assortment.
Distribution
Domestic Segment
U.S. Best Buy online merchandise sales generally are either picked up at U.S. Best Buy stores or delivered directly to
customers from a distribution center or retail store. The ship-from-store capability allows us to improve product availability and
delivery times for customers. 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 may be shipped directly to our stores from suppliers.
International Segment
Canada’s online merchandise sales are picked up at our stores, delivered directly to customers from a distribution center or
retail store, or delivered directly to the customer from the vendor. Our Canada stores' merchandise is shipped directly from our
suppliers to our Canadian distribution centers. In order to meet release dates for certain products, merchandise may also be
shipped directly to our stores from suppliers.
Our stores in Mexico have distribution methods similar to that of our U.S. Best Buy stores.