Best Buy stresses localization and cautious expansion

Zia Daniell Wigder | May 13, 2008, 03:45 PM

An article in the Financial Times today discusses Best Buy’s international expansion: the company recently announced a retail joint venture in Europe with Carphone Warehouse that brings them into nine different European countries. Best Buy will also open its own stores in Europe, as well as in Turkey and Mexico (adding to its presence in China and Canada).

The company has been a strong proponent of launching its own Best Buy-branded stores while simultaneously engaging in joint ventures or acquisitions run by local managers, thereby gaining local expertise that can help in the development of successful offerings. Indeed, CEO Brad Anderson stresses the need to move cautiously and to get the strategy right before scaling, as he describes the company as “extraordinarily concerned” about the dangers of moving too quickly with global rollouts.

Best Buy will follow its current international expansion with an e-commerce offering, allowing the company to tap into markets where no physical stores exist. Indeed, for retailers such as Best Buy that have substantial physical presence in multiple markets, an e-commerce offering is a logical next step, as purchases made online can generally leverage the company’s existing fulfillment and customer service infrastructure.

Other retailers should carefully watch Best Buy’s global expansion as the US retail giant tries to nail international markets with a thoughtful strategy that takes advantage of local expertise rather than simply relying on skills obtained domestically.