Best Buy's Failure in the United KIngdom
Margaryta Rebezova
Professor Patrick Yanez
IN324 International Marketing Research
Term Project: International Marketing Blunders
Best Buy’s failure in the United Kingdom
Best Buy attempted to cross the Atlantic and deliver US-style retailing to British consumers and has failed miserably, with the retailer closing all of its big box stores in the UK. The timing might have been wrong, but its deviation shows that adapting to changes in the new target market is crucial. Even the most successful retail formats can fail if they do not consider those changes.
Best Buy Europe is a joint venture between US group Best Buy and Carphone Warehouse, which was formed in 2008 when Best Buy paid £1.1bn to buy a 50% stake in Carphone Warehouse 's retail division. Best Buy Europe launched its first store in May 2010, opening a total of 11 stores across the UK. The original plan was for 200 out-of-town "big box" shops around Europe by the end of 2013, selling everything from washing machines to laptops. The outlets were open in Liverpool, Derby, Bristol, Nottingham, Rotherham, Dudley, Thurrock, Southampton, and three places in London - Croydon, Hayes and Enfield (BBC News). Best Buy Europe was shuttered after just 18 months in business. In that short amount of time, it lost £80 million ($127 million), largely due to consumer belt-tightening and increased competition from cheaper online retailers. Up to 1,100 jobs was lost at the eleven UK stores (Engadget).
Part of the problem was cultural: big box retail is not as widely accepted on the other side of the Atlantic. "Some things that work in the largest economy in the world don 't work in smaller economies," says Mittelstaedt. "You can 't scale down the same way." But Best Buy 's timing was also badly judged. The margin in electronics is growing thinner and thinner. So much of the electronics retail business has moved online that consumers around the world use big box stores as mere "showrooms" for online rivals (HSBC Global
Professor Patrick Yanez
IN324 International Marketing Research
Term Project: International Marketing Blunders
Best Buy’s failure in the United Kingdom
Best Buy attempted to cross the Atlantic and deliver US-style retailing to British consumers and has failed miserably, with the retailer closing all of its big box stores in the UK. The timing might have been wrong, but its deviation shows that adapting to changes in the new target market is crucial. Even the most successful retail formats can fail if they do not consider those changes.
Best Buy Europe is a joint venture between US group Best Buy and Carphone Warehouse, which was formed in 2008 when Best Buy paid £1.1bn to buy a 50% stake in Carphone Warehouse 's retail division. Best Buy Europe launched its first store in May 2010, opening a total of 11 stores across the UK. The original plan was for 200 out-of-town "big box" shops around Europe by the end of 2013, selling everything from washing machines to laptops. The outlets were open in Liverpool, Derby, Bristol, Nottingham, Rotherham, Dudley, Thurrock, Southampton, and three places in London - Croydon, Hayes and Enfield (BBC News). Best Buy Europe was shuttered after just 18 months in business. In that short amount of time, it lost £80 million ($127 million), largely due to consumer belt-tightening and increased competition from cheaper online retailers. Up to 1,100 jobs was lost at the eleven UK stores (Engadget).
Part of the problem was cultural: big box retail is not as widely accepted on the other side of the Atlantic. "Some things that work in the largest economy in the world don 't work in smaller economies," says Mittelstaedt. "You can 't scale down the same way." But Best Buy 's timing was also badly judged. The margin in electronics is growing thinner and thinner. So much of the electronics retail business has moved online that consumers around the world use big box stores as mere "showrooms" for online rivals (HSBC Global
Cited: “Carphone Warehouse to close all 11 Best Buy shops.” BBC News, 7 Nov. 2011, Web. 14 Apr. 2013 Cooper, Daniel. “Best Buy to close UK operations, 1,100 jobs in jeopardy.” Engadget.com, 7 Nov. 2011, Web. 17 Apr. 2014 Gallant, Paul. “10 biggest overseas blunders.” HSBC Global Connections, 27 Dec. 2012, Web. 17 Apr. 20114 Garside, Juliette. “Best Buy: five reasons Carphone had to hang up.” The Guardian, 7 Nov. 2011, Web. 14 Apr. 2014 O’Brien, Patrick. “Why Best Buy failed in the UK: Risks of Global Expansion.” RIS News, 14 Nov. 2011, Web. 14 Apr. 2014 Potter Mark and Skariachan Dhanya. “Analysis: Best Buy seen pulling plug on UK megastores.” Fox Business, 19 Sept. 2011, Web. 13 Apr. 2014