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Best Buy Mobile Stores Growing At 4G-Like Speeds


— It’s only been four years since Best Buy
hooked up with Britain’s Carphone Warehouse to crack
the U.S. wireless market and opened its first Best Buy
Mobile store in Manhattan.

Since then the CE chain has rolled out more than 100
of the freestanding wireless shops, placed Mobile departments
in each of its big-box stores, and more than doubled
its handset market share to between 4 percent and 5 percent.

But to hear Best Buy Mobile president Shawn Score
tell it, the company has only scratched the surface.

Indeed, given present opportunities in real estate,
technology and the competitive environment, Best Buy
appears well positioned to meet its goal of a 15 percent
piece of the domestic wireless market.

On the real estate front, the company and its European
partner plan to ultimately operate upward of 1,000 Mobile
stores across the country, and have already targeted 200
shopping malls for the rollout before expanding to strip
malls. Enclosed malls provide the perfect medium for the
1,200-square-foot shops, Score told TWICE earlier this
month on the eve of his group’s 100th store opening, and
provide a new customer base, i.e. women and teens, who
don’t typically shop large-format Best Buy locations.

The shops offer more than 90 handsets from nine carriers;
netbooks, notebooks and e-readers; more than 130
accessories; mobile broadband modems and routers; and
pre- and post-paid phone and wireless broadband plans,
including 3G and 4G service under the new Best Buy
Connect private-label brand.

Plans are also afoot for the flagship stores, where bigbox
Mobile departments are being expanded to accommodate
the growing assortment. The expansion is part of
Best Buy’s center-of-the-store redesign, where connectivity
and content solutions for TVs, computers and phones
will blur traditional departmental lines. As with the first two
screens, Score said Best Buy is also exploring opportunities
to leverage the chain’s Napster and CinemaNow digital
delivery services for mobile devices by preloading them
with software and possibly creating a download store on
the company’s beta-phase website.

The growth runway is equally long on the product front,
where smartphones, accessories and slate computers
represent huge growth opportunities, he said.

Smartphone adoption is at a tipping point in the U.S.
“and is really ramping up,” Score observed, pointing to
a recent Best Buy-commissioned survey by Gfk Roper
showing that 45 percent of shoppers want multimedia capabilities
on their mobile devices; nearly 30 percent want
to replace their landline phones; and more than a quarter
want their devices to access social-networking sites and
be Wi-Fi-enabled.

What’s more, Carphone Warehouse projects that
smartphones will represent about 83 percent of all cellphones
by 2013, and notes that:

• the average revenue generated by a smartphone activation
is 3 percent higher than that of non-smartphones;

• Geek Squad’s service attachment rate for smartphones
of 44 percent is about 26 percent higher than that
of non-smartphones, and;

• the attachment rate for smartphone accessories of 36
percent is 157 percent higher than that of less sophisticated

Score is particularly enthusiastic
about accessories, which tend to lag
device launches. “There’s a huge customer
need for cases, chargers, power
supplies and screen protectors,” he said.

He also anticipates that “We will see
a lot of slate PCs this holiday season,”
perhaps including the private-label Rocketfish
prototype that Best Buy chief technology
officer and Geek Squad founder
Robert Stephens teased over Twitter this

Other opportunities abound in prepaid
premium handsets — including Android
devices and BlackBerries — which
have “well exceeded expectations,” he
said, as well as pre-paid mobile broadband,
which has shown “significant

Internally, Score is making up for lost
time in leveraging Best Buy’s 25 million
Reward Zone loyalty-program customers
(“We’re woefully undelivering to them,”
he acknowledged), but is making hay by
keeping in touch with subscribers over
the course of their two-year-long phone
contracts. The effort, unofficially dubbed
“Happy 24,” includes reminder notices
about upgrade eligibility, which only four
in 10 customers would otherwise receive,
the Roper survey showed.

All told, he said, sales of mobile accessories
and airtime make for a “very attractive”
basket, putting Score in the catbird
seat as demand for TVs and other traditional
core CE categories has cooled.