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Best Buy Takes A Bite Of Big Apple

NEW YORK -- Best Buy blasted its way into the Big Apple last month with a multimillion-dollar marketing blitz befitting its largest untapped market.

Executed with military-like precision, the textbook campaign heralded the official opening of the chain's first 11 stores within the battle-scarred New York market, long considered a killing field for CE and majap merchants.

The first wave of Best Buy superstores, located in suburban Long Island, New Jersey and upstate New York, form a perimeter around the city proper. Penetration of Gotham's outer boroughs begins this month with stores in Staten Island and Queens, and at least four units are planned for Manhattan isle within the next two years, although no leases have yet been signed.

Ultimately, Best Buy hopes to have about 40 stores up and running throughout the New York metro area by 2004, generating an anticipated $2 billion in annual sales. Their expected $50 million per unit revenue would beat the company average of $40 million per store, helping to offset the higher cost of doing business here.

To prepare the way, Best Buy began its $20 million assault on the city with a barrage of teaser ads on local TV, in newspapers, and on buses and subways. The ads were built around the company's anthropomorphic blue-and-yellow price tag icon, which conducted man-on-the-street interviews with New Yorkers for the TV spots.

After softening up the beachhead, Best Buy opened up its big guns with a free Sting concert in Manhattan's Central Park. Produced by the retailer's Redline Entertainment division, the event was attended by 25,000 fans and featured guest appearances by rocker Sheryl Crow and comedian Dennis Miller. Concert tickets, as well as $5 store coupons and CD-ROMs containing Sting performances, were distributed by Best Buy street crews situated at high-traffic areas around the city. The concert was also simulcast on radio stations nationwide.

The festivities continued as the retailer set up shop in Grand Central Station and at the New York Stock Exchange -- key thoroughfares for the Wall Street crowd. There, coffee and pastries were served in tented Best Buy "Fun Zones" that displayed the latest CE technologies within homelike vignettes, while some 20,000 T-shirts, hats, subway tokens, $5 gift cards and contest entry forms were handed out to the crowds.

In a further nod to the financial community, chairman/CEO Richard Schulze rang the opening bell at the Stock Exchange before holding an investment conference for analysts, who were later bussed to the company's regional flagship store in Westbury, Long Island.

That unit, a 45,000-square-foot Concept 4 store that also houses the company's regional headquarters, was tweaked in order to realize the higher-volume requirements of the pricey New York market. Converted from a former big-box menswear store, the regional prototype features wider aisles and additional checkout counters, and repositions digital and Web-connected devices directly along the high-traffic racetrack.

Explained Mike Linton, senior VP of strategic marketing, "The flow is different. We moved the MSN kiosks, the PCs and the emerging technologies up front and by the racetrack in order to capitalize on the Internet."

Agreed executive VP/marketing Wade Fenn, "We'll still sell $59 VCRs, but our focus is on fully featured, connected digital products and services."

Meanwhile, Best Buy's Big Apple competitors launched rear-guard actions of varying intensity. Indigenous dealers P.C. Richard and The Wiz stepped up the promotional pace with blowout sales in electronics and appliances, while Harvey Electronics announced the opening of its ninth store in the New York bedroom community of Eatontown, N.J., where 6th Avenue Electronics and Circuit City maintain neighboring superstores.

The only other rain on Best Buy's New York parade came in the guise of a CBS News report on overly aggressive sales of extended service contracts in some of the company's Florida stores. The report -- which aired on CBS' 48 Hours on the eve of the grand openings and singled out Best Buy for the practice -- sited an investigation by the Florida attorney general into allegations that sales associates denigrated manufacturer warranties and deferred sales to consumers who didn't buy into the service plans.

A Best Buy spokeswoman told TWICE that the six-month investigation was based on a single complaint, and that the localized issue was resolved through a $200,000 payment to the attorney general's office and a regional consumer rights group. "It's absolutely not an institutionalized thing," she said. "We fire people for disparaging manufacturer warranties."

The spokeswoman said the broadcast elicited only 20 phone calls to Best Buy, and that the New York stores "opened very strong" the next day. "We're really pleased with the results."

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