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Best Buy

Best Buy to pull out of UK market?

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By The Drum Team, Editorial

September 20, 2011 | 2 min read

Best Buy is rumoured to be considering withdrawing from the UK market next year, closing all 11 of its UK stores following an ill-timed European expansion drive.

Analysts believe the admission of defeat reflects an acknowledgement that Best Buy’s business model hasn’t suited British audiences and reflects growing concern at increased competition in their home market.

Instead Best Buy will concentrate on taking on rival discount stores and online retailers in America.

It is likely company will also shrink other stores and refocus its product lines away from weaker areas such as entertainment toward fast growing sectors such as mobiles.

The firm has weathered tens of millions in annual losses, reaching a cumulative loss of £62m since the ill fated venture was launched back in 2008 – just as the credit crunch hit.

Best Buy was criticised for publicly announcing its expansion plans in advance, allowing rivals such as Dixons to open up competitor stores close by.

Anthony Chukumba, an analyst with BB&T Capital Markets, said: “It was the wrong format, at the wrong time, in the wrong market.

"U.S. retailers have a mediocre to bad track record of expanding their concepts into Europe. I think part of it is different cultures and part of it is the fact that U.S. brands aren't as readily known in Europe.

"U.S. retailers tend to have large box stores and generally Europeans aren't used to shopping that way. They are used to shopping in smaller boxes.”

A spokesperson for Best Buy commented: “We always said we would open 11 stores and then conduct a strategy review. We are now conducting our evaluation with our partners and will provide an update in due course.”

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