Home Retail Best Buy Europe strategy under review

    Best Buy Europe strategy under review


    Best Buy is poised to put its European expansion plans on hold, a move that could raise questions over its commitment to electricals retailing in the UK.

    Best Buy Europe is unlikely to make a final decision by the time Carphone Warehouse, which owns 50 per cent of the venture, announces its final results on Tuesday.

    But people familiar with the situation said Best Buy would not be expanding any further into Europe, given the challenging conditions in the market. They said the “strategy continues to be under review”.

    The impasse raises questions about the company’s commitment to the UK, just a year after Best Buy Europe opened its first store in Thurrock, Essex.

    When Best Buy first announced plans to move into the UK, it indicated it could have 100 “big box” stores by 2013, and 200 across Europe. The UK target was later revised to 80.

    The U-turn comes just six months after Best Buy Europe insisted that plans to expand in Britain remained on track, despite pulling out of a significant property deal in the north-east of England.

    The US company’s much-publicised British expansion appeared to falter in December when it axed plans to combine a former Mothercare store with an empty retail unit at Team Valley Park in Gateshead, near Newcastle.

    Best Buy Europe has been hit by a downturn in demand for electricals and competition from a nimbler DSG, which is improving its stores and service under former Tesco executive John Browett.

    Home Retail Group, which owns Argos and Homebase, reported particularly weak sales of electricals at the catalogue retailer. Kesa is also considering a sale of its struggling Comet division.

    ? Sandwich chain Pret a Manger is preparing to open two shops in Paris this year, making France its first new territory since a troubled expansion into the US and Asia a decade ago.

    The company expects to sign leases in the coming weeks for two sites – one in La Défense and the other near the Champs-Elysées. The locations mean Pret will roll into one push an expansion process that took two steps in the UK, where founders Julian Metcalfe and Sinclair Beecham built up a lunchtime following in the City before taking on shops in London’s West End.

    The French shops will offer more seating than those in a typical London Pret and will have a different range of products – increasing, for example, the number of baguette sandwiches on sale.

    Clive Schlee, chief executive, said the adjustments were the result of past mistakes abroad. He joined the company as it was retrenching internationally. In 2000, it started opening several stores in the US, Hong Kong and Tokyo. But the freshly made packaged sandwich concept that had quickly caught the imagination of Britons proved a harder sell.

    Mr Schlee said the company aims to increase sales by 15 per cent a year, two-thirds of which should come from expansion and one-third from same-store sales.

    Source : Financial Times