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Best Buy Boosts Expansion Plans

4/27/2005 01:43:00 PM Eastern

Minneapolis — Best Buy has raised the ceiling on its retail build-out plans by 20 percent and will begin rolling out freestanding Geek Squad stores.

The No. 1 CE specialty chain announced today that it has raised its total store count target to 1,200 locations in the United States and Canada, up from 1,000. Best Buy currently operates 838 superstores in North America and has been adding about 75 new locations a year.

Most of the remaining stores will be 20,000-square-foot units that will allow the company to penetrate urban areas and smaller markets, and to backfill existing trading areas. A 10 percent decrease in the cost of new store construction and an increase in sales per square foot afforded by its new customer centricity operating model were the factors that allowed Best Buy to raise its build-out goal by 200 stores, the chain said.

Meanwhile, following a successful three-market test of five Geek Squad stores, Best Buy will launch 20 to 50 of the 1,500-square-foot IT support shops in cities around the country over the next 12 to 18 months. The stores, which will sell Geek Squad-branded private label PC accessories in addition to tech support services, are aimed at consumers that don’t shop Best Buy. Their small footprint will also allow them to be placed in more convenient locations than the company’s flagship superstores.

“Expanding and enhancing our services offering is one of our top goals for the company,” said CEO Brad Anderson. “We know that more consumers are storing their photos, music, home videos and games on their computers. As their computer-based content becomes more important to them, so do the services that help them enjoy and protect that content. Moreover, we would like to claim for Geek Squad a position as the premier, national computer service provider. So far, the customer response has been terrific, and customer loyalty to Geek Squad is high.”

To support the expansion, Best Buy plans to hire an additional 5,000 Geek Squad service technicians this year, bringing the total to 12,000 agents, and will increase its Geek Squad advertising efforts.

Separately, Best Buy also announced plans to open lab stores in China over the next 12 to 18 months. Vice chairman Al Lenzmeier described the country as an “attractive retail market” and a part of Best Buy’s long-term growth strategy.