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Big-Box Retailers Open in Cozier Corners By Kris Hudson

Big-Box Retailers Open in Cozier Corners By Kris Hudson. BA 495 Spring 2007 MW 2-4pm Nicole Cecchini Carrie Fox Amanda Morneault. Evolution of Electronics. The size of electronics seem to be getting smaller every year. Televisions VCR and DVD players Home and cell phones Computers.

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Big-Box Retailers Open in Cozier Corners By Kris Hudson

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  1. Big-Box Retailers Open in Cozier CornersBy Kris Hudson BA 495 Spring 2007 MW 2-4pm Nicole Cecchini Carrie Fox Amanda Morneault

  2. Evolution of Electronics • The size of electronics seem to be getting smaller every year. • Televisions • VCR and DVD players • Home and cell phones • Computers

  3. As a Result… • Electronics stores need less space • Best Buy • Circuit City • Plans for new stores 30-40% smaller than current • Other factors • Consumers increasing their music and video purchases online • Smaller stores will allow market penetration of suburbs and urban areas

  4. The Idea is… • "We're taking a square footage and a revenue number for a market and, instead of trying to force it into one large box, we're spreading it across smaller boxes that are more convenient," Best Buy's vice president of real estate, Pat Matre, says. • US Investors are beginning to want a bigger bang for the invested capital buck. • Who else is changing? • Home Depot • Lowe’s • Office Depot • EVEN Wal-Mart

  5. But, Best-Buy and Circuit City downsizing will be more substantial • Typical Best-Buy store = 45,000 sq. ft. • New store = 30,000 sq. ft. or less • Typical Circuit City store = 34,000 sq. ft. • New store = 20,000 sq. ft. • These retailers will maintain • Sizes of existing stores • Store colors • Layout within the store (sections, aisles, position of checkout)

  6. What They Will Change • Product Offerings • Fewer CDs and DVDs • Fewer floor models • Fewer appliances • Fewer items in inventory • All this means…Fewer employees • Standard Best-Buy store = 125 employees • New smaller store = 100 employees

  7. Why Change? • They could be reaching market saturation for support of their big-box stores: • Sixty-six percent of the U.S. population lives within 10 miles of a Best Buy store, and 62% within 10 miles of a Circuit City, according to ACNielsen. • Expanding electronics offerings by Target, Costco and Wal-Mart • Create smaller stores to surround their competition.

  8. Space Allocation Planning • About 20% of average retailer’s inventory is either obsolete or not wanted by the retailer’s target market (pp 460) • These big box retailers have realized their greatest productivity resides in the development of smaller retailers • Determine the most productive allocation of space

  9. What do you think about the changes?

  10. Sources • The Wall Street Journal • www.wsj.com • Google • www.google.com • Search “Big-Box Retailers Open in Cozier Corners”

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