Best Buy Planning 1,000 In-Store Mobile Shops By 2010

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Minneapolis — Best Buy plans to have as many as 1,000 Best Buy Mobile in-store shops installed chain-wide by the end of 2009.

The stores, comprised of freestanding and store-within-a-store formats, feature an expanded assortment of handsets, accessories and services for multiple carriers, including AT&T, Sprint, T-Mobile and Verizon, and such mobile virtual network operators (MVNOs) as Boost, Kajeet and Virgin. The concept was launched late last year in Manhattan, and by the end of September had expanded to 70 locations around the country.

According to Best Buy’s partner in the venture, Britain’s Carphone Warehouse, the aggressive rollout plans were encouraged by the strong performance of the New York test stores, where handset sales more than doubled from 2006.

The two companies will also expand the number of freestanding stores, and will open locations in Best Buy’s international markets, which currently include China and Canada.

Carphone, the world’s largest independent mobile phone retailer, outlined the partners’ plans today in its second-quarter earnings announcement. Under terms of the venture, which was were formalized during the period, Best Buy will receive a financing charge to fund the operation while Carphone will receive a share of incremental profits above the historic profitability of Best Buy’s mobile business based on a sliding scale.

Carphone said it expects to lose money on the operation during its current fiscal year and to break even in 2008, although the potential exists for “significant profitable growth” thereafter.

Best Buy said in July that it would open upwards of 180 Best Buy Mobile units in 12 states over the ensuing nine months, including 170 shops within Best Buy stores and up to 10 freestanding locations. The rollout is expected to encompass such metro markets as Baltimore, Boston, Chicago, Minneapolis, Philadelphia, Washington and Raleigh-Durham, N.C., and will conclude at the end of February 2008.
The planned build-out will likely put added pressure on RadioShack, which derives about a third of its revenue from mobile phone-related sales.

In September the retailer gave responsibility for Best Buy Mobile and its domestic and global rollout to 19-year company veteran Tim McGeehan.


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