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Analysts See Potential In Samsung, Best Buy Tie-Up

4/07/2013 08:00:00 PM Eastern

RICHFIELD, MINN. — Samsung’s plan to roll out dedicated Samsung shops inside Best Buy stores for its cellphones, tablets, laptops and connected cameras will give the CE maker a strong opportunity to solidify its large smartphone share, boost its smaller shares of the laptop and tablet markets, and drive home the ability of Samsung’s mobile devices to share content with Samsung TVs, analysts said.

The store-within-a-store shops “give Samsung a better opportunity to demonstrate the attributes of their devices in a more meaningful way,” said IDC analyst William Stofega.

Best Buy will also gain, said Janney Montgomery Scott analyst David Strasser. The plan “is indicative of Best Buy making merchandising progress as well as highlighting the value of Best Buy real estate. This is the second player, Apple being the first, which has gone the route of leveraging Best Buy real estate to drive people into their respective ecosystems,” he said. The boutiques “will inevitably use up some of that CD/DVD square footage at multiples of productivity and margin,” Strasser added.

By early May, the Samsung Experience Shops will launch in 500 Best Buy big-box stores and in all Best Buy Mobile stores, Best Buy told TWICE. By early June, the remainder of large-format stores will feature the shops.

All told, 1,400 stores will get the shops, which will enable consumers to interact with and buy Samsung’s mobile products “and experience how the devices connect together to enrich their lives,” the retailer said.

The shops will vary in size, with the largest being about 460 square feet. In the larger shops, a Samsung Connected Solutions area will show consumers how Samsung devices share content across multiple screens, Best Buy added.

The shops will offer smartphones, tablets, Wi-Fiand 4G-connected cameras, and accessories. “We will have a connected solutions table that will feature select Bluetooth-enabled accessories on a rotating basis. This will not be available at launch, but it will definitely roll out later this year,” a Samsung spokesperson told TWICE.

As part of the rollout, Samsung will hire and train Samsung Experience consultants who will work in all large-format stores alongside Best Buy blue-shirt sales consultants, Best Buy told TWICE. Samsunghired salespeople will not work in the Best Buy Mobile stores, however.

In the large-format stores, the Samsung and Best Buy employees will help customers purchase and activate cellphones, educate them about products, and support them “throughout the lifecycle of their product,” the retailer said.

To go with the physical boutiques, Best Buy will set up an online Samsung boutique later in the second quarter for online sales and support.

Analyst Strasser contended that he is “pretty confident this will end any possibility of show-rooming with Samsung products.” Samsung “simply won’t tolerate it anymore after making this investment,” he said.

The development could also spur other vendors to set up shops at Best Buy, Strasser speculated. Vendors such as Microsoft and Google “will also need to take up more space and invest more heavily in Best Buy as a distribution partner,” he said. “They know that today, even more than they did yesterday.”

For his part, Forrester senior analyst Tony Costa called it “a great move from a service and support standpoint.” Consumers “never really know where to take their phones for help with upgrades or problems they are having, and carrier shops are a mixed bag. It also gives Samsung a distinct advantage over other Android competitors who lack similar capabilities.”

Samsung “raised the bar on service to come closer to what Apple is offering customers, and other players will need to raise to the challenge or risk falling behind,” he added.

Nonetheless, he warned that “execution will be everything. It could turn out to be a great experiences for customers or one not dissimilar to shopping in other Best Buy departments. I can’t count the number of times I’ve walked by the Apple store-within-a- store at Best Buy only to find it unattended with little to no human activity. Samsung will have to make these ‘the place’ to go to when in Best Buy to have the impact they are hoping for,” he said.

IDC analyst William Stofega said the plan “shows that Samsung is not leaving anything up to chance” in the smartphone market despite the company’s already- strong smartphone sales. Samsung has taken over more control of its smartphone advertising from carriers, “and now they are taking more control of distribution,” he explained.

The shops, said another IDC analyst, Ramon Llamas, present Samsung with an opportunity to sell multiple Samsung products to a customer because of the ability to demonstrate how different Samsung products interact with one another without having to take the customer from department to department.

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