Bang & Olufsen Slowing Pace Of Store Expansion

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In the aftermath of Sept. 11, Bang & Olufsen is applying the brakes to its ambitious build-out plan for 100 B&O stores in the United States by 2004 and upwards of 800 worldwide by 2005.

Citing the soft economy and mixed CE retail scene here, Ole Bek, president of Bang & Olufsen America, told TWICE that the company has slowed the expansion of its branded specialty shops, which are the sole U.S. showcase for the Danish vendor's sleek, super high-end A/V line.

"We were looking at a three- to five-year plan," he said. "Now we're looking at a six- to seven-, or maybe an eight-year plan."

Ironically, Bek spoke on the occasion of a new store opening on Columbus Avenue here, which represents the 62nd B&O store in the U.S., the 13th in a joint-venture partnership with Exeter, N.H.-based Mark2, and the third location in Manhattan.

"We're not pursuing new locations as aggressively as we were," Bek continued. "It's harder to make a profit right out of the gate, so we're being more selective."

The company is also departing from its plan by bringing in a limited amount of non-B&O branded product to fill temporary gaps in its line, such as a 42-inch Panasonic LCD TV. Explained Bek, "I'm not absolutely crazy about it, but we were hit hard by 9/11 and we wanted to create more volume, so we created a merchandising solution."

Bek is also trying to buoy business by expanding custom home installation services to all company-owned, independent and joint-venture stores. "We have very good products, solutions and systems, but we haven't been aggressive enough getting custom installation established in the stores," he said. "So we're spending a lot of resources on helping stores get involved in that business."

Despite the slowdown, the company remains committed to its restricted distribution plan, encouraged perhaps by the success of the strategy in England, where consumer spending is up, and in Spain, where B&O stores have enjoyed steady 10 percent to 15 percent annual sales gains since 1993.

Bek also took solace in last month's U.S. sales results, which soared 25 percent over April 2001. Still, he's advising his merchants to not count on an economic recovery within the next 12 months to lift revenues.

"We need to build business ourselves," he said.


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