Richard M. Schulze founded Best Buy with business partner James Wheeler when they opened “Sound of Music,” an audio specialty store located in Saint Paul, Minnesota in 1966. In 1967 Sound of Music acquired Kencraft Hi-Fi Company and Bergo Company, which led to a second and third store opening near the University of Minnesota and in downtown Minneapolis. The Sound of Music ended its first year with gross sales of $173,000(USD). In 1969 Sound of Music stock was first traded as a publicly held company and in 1970 they hit the $1 million mark in annual revenues. In 1983, Sound of Music’s board of directors approved a new corporate name: Best Buy Co., Inc. The name resembled its marketing strategy: Whatever the product, it would be inexpensive and a good deal. Best Buy went onto open its first superstore in Burnsville, Minnesota that provided expanded selling space, a wide assortment of discounted brand-name goods, central service, and warehouse distribution. The first stores began selling appliances and videocassette recorders, as they became regular household items. Best Buy’s debut on the New York Stock Exchange (BBY) came in 1985 with an offering of 8.3 million shares. In 1986 a public stock offering raises $33.6 million, which in result helped financed a 12-store expansion. In 1989 Best Buy implements a revolutionary “grab and go” store format in a non-commissioned, warehouse-style environment. Richard Schulze was always looking for customer feedback and found the most customers disliked the pressure associated with salesmen working on a commission basis. Due to this customer feedback, Schulze took the superstore concept a step further by eliminating sales commissions. They called this new direction as Concept II. The Grab and Go format appealed to customers, as they were able to walk into a store, find what they were looking for, and walk out. Schulze stressed the importance of customer service to his employee’s, but also gave the customer the freedom of being able to shop on their own without the pressure of an employee trying to sell them more than they needed. The next step of expansion came when Best Buy started targeting its biggest competitor, Circuit City. They began by initiating Concept III. Concept III focused on a new store layout that increased store sizes to either 45,000 square feet or 58,000 square feet. They implemented these stores in Circuit City markets. The goals of these new stores were to get customers to shop around longer and to make the visits more of an overall experience. Best Buy implemented interactive information kiosks and demonstration areas. In 1997 Best Buy was the first retailer in the US to sell DVD hardware and software and in 2000 Best Buy enters the online retailing business by launching Bestbuy.com. In 2001, Best Buy entered the international world after buying out Canada’s leading electronic company “Future Shop” for $580 million. In 2003, U.S. Best Buy stores surpass the 600 mark and the company opens its first global sourcing office in Shanghai. In 2004 Best Buy introduces “Geek Squad” into every Best Buy store nationwide and in 2007 Best Buy opens its first store in China. In 2008 they expand to Puerto Rico, and Mexico, as well as opening another store in Shanghai. From 1966 until now Best Buy has introduced mass-merchandising concepts that have changed how consumers buy electronics. Best Buys history is important in understanding how they have continued to grow, and why they will continue to expand internationally. Currently, Best Buy is a multinational retailer of consumer electronics, home office products, entertainment software, appliances and related services. Best Buy currently operates under a number of different brand names such as Best Buy, The Carphone Warehouse, Five Star, Future Shop, Geek Squad, Magnolia Audio Video, Napster, Pacific Sales, The Phone House, and Speakeasy. Best Buy operates in two reportable...
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