Bang & Olufsen Steps Up Pace Of Store Openings

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MOUNT PROSPECT, ILL. -- Bang & Olufsen America (BOA) has entered an expanded joint venture with B&O storeowner Mark2 Inc. to operate a total of 16 of the specialty A/V shops.

The deal, which will result in the largest concentration of independently owned B&O stores to date in the United States, represents a new push by BOA to have more than 100 of its brand-exclusive shops up and running within the next two years.

Exeter, N.H.-based Mark2, which is owned by Marc Chelnik and Mark Russell, currently operates four successful B&O stores, said BOA president Ole Bek. The expanded partnership reflects a renewed effort by the manufacturer to accelerate store openings now that BOA has completed the phase-out of its high-end products from conventional retail channels. The last B&O products were pulled from chain store shelves in May.

Bek said plans call for the opening of 25 to 30 company and independently owned stores each year for the next four years. Initially, some 40 to 50 units would be joint ventures, with owners operating 15 to 25 stores on a regional basis, while "maybe only 15 to 20 would be operated by us."

As of last month, 43 B&O stores were in operation in the United States, five of which are company owned and operated, up from two in 1998.

"By partnering with Mark2 in future development, we combine their development and management expertise with BOA's financial support for faster expansion," Bek said, noting that Mark2's Madison Ave. store in New York is the chain's No. 1 volume producer domestically and No. 2 worldwide.

"Joint development with other successful B&O retail partners" -- including both individuals and other retail chains -- "will play a major role in our retail development strategy," Bek added.

Averaging 1,500 square feet, the upscale stores have become CE fixtures in such premier shopping locations as Rodeo Drive, Madison Avenue and San Francisco's Union Square.

"We're excited about this opportunity to develop more Bang & Olufsen shops," said Mark Russell. "It gives us a strong base for developing 10 new shops, while strengthening the financial base for our current shops."

Bek said B&O has had a difficult time finding owner-operators in the United States, where, unlike Europe, there's a limited pool of small, independent retailers with a CE background available to open B&O shops. It's also easier in Europe to bring in candidates from outside the CE industry because of B&O's greater brand awareness there, he said.

"In the U.S., we're better able to find a qualified [owner-operator] organization if we go to a larger organization," Bek noted, citing such retail partners as Florida's Sound Advice and Harvey Electronics in metro New York.

Bek expressed frustration over "too many situations in the past year when the right location would be available, but the right person wasn't." He added that BOA hopes to seed the market "if we can operate permanently because we sell it to the right owner."

Besides its Madison Ave. store, Mark2 operates units in Atlanta, King-of-Prussia, Pa., and Roosevelt Field, Long Island, and will assume ownership of BOA-operated shops in Short Hills, N.J., and Tyson's Corner, Va. A new shop is under development in Providence, R.I., and 10 additional stores are expected by 2002 in Atlanta, Baltimore, New York and Philadelphia. -Joseph Palanchar contrbuted to this story.

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