Best Buy in shock closures
By Feng Jianming |
February 23, 2011, Wednesday
|
Print Edition
Print Edition
Best Buy Inc closed all its nine outlets in China yesterday, including six in Shanghai, because of "a change of business strategy."
The world's largest consumer electronics retailer is also to close its retail headquarters in Shanghai and instead plans to open around 50 outlets in China under the Five Star brand, the company said in a statement on its website yesterday.
The United States company bought China's Five Star in 2009 for US$185 million.
Another two "new and different" Best Buy outlets will be opened in China later this year, the company added.
Nanjing-based Five Star operates around 160 stores with a focus in Shanghai's neighboring Zhejiang and Jiangsu provinces.
Best Buy did not rule out the possibility of opening Five Star outlets in Shanghai.
"Anything may happen," Best Buy media officer Liu Ting said.
The company is not giving up the Chinese market but is instead changing its business model to meet the needs of local consumers, analysts said.
Chen Can, an Analysys International analyst, said Best Buy had lost market share to domestic rivals because it was unable to offer low prices to local customers due to high operating costs.
"Unlike Chinese retailers, Best Buy is spending a lot of money to own property, to buy products, and to employ its own sales team," said Chen.
"It offers a better customer experience, but it cannot afford the low prices that Chinese customers favor."
Chen said Best Buy's retreat may harm the Chinese appliance market in the long run.
"The obsession with low prices is deep-rooted but unhealthy," he said. "Suppliers are losing profits and are forced to follow retailers' requirements."
Analysts expect Gome and Suning, two domestic appliance retailers that each operate more than 1,000 stores in China, will grab a combined 40 percent of market share by 2015.
"Chinese appliance chain stores will be the winner of the market because a nationwide sales network would help retailers bargain with suppliers," said Zhao Xueqin, an analyst with CITIC Securities.
Best Buy also announced yesterday that it was closing its two stores in Turkey in an effort to "restructure the market."
It expects savings of as much as US$70 million by 2013 from the closures and other actions in China and Turkey, its statement said.
The world's largest consumer electronics retailer is also to close its retail headquarters in Shanghai and instead plans to open around 50 outlets in China under the Five Star brand, the company said in a statement on its website yesterday.
The United States company bought China's Five Star in 2009 for US$185 million.
Another two "new and different" Best Buy outlets will be opened in China later this year, the company added.
Nanjing-based Five Star operates around 160 stores with a focus in Shanghai's neighboring Zhejiang and Jiangsu provinces.
Best Buy did not rule out the possibility of opening Five Star outlets in Shanghai.
"Anything may happen," Best Buy media officer Liu Ting said.
The company is not giving up the Chinese market but is instead changing its business model to meet the needs of local consumers, analysts said.
Chen Can, an Analysys International analyst, said Best Buy had lost market share to domestic rivals because it was unable to offer low prices to local customers due to high operating costs.
"Unlike Chinese retailers, Best Buy is spending a lot of money to own property, to buy products, and to employ its own sales team," said Chen.
"It offers a better customer experience, but it cannot afford the low prices that Chinese customers favor."
Chen said Best Buy's retreat may harm the Chinese appliance market in the long run.
"The obsession with low prices is deep-rooted but unhealthy," he said. "Suppliers are losing profits and are forced to follow retailers' requirements."
Analysts expect Gome and Suning, two domestic appliance retailers that each operate more than 1,000 stores in China, will grab a combined 40 percent of market share by 2015.
"Chinese appliance chain stores will be the winner of the market because a nationwide sales network would help retailers bargain with suppliers," said Zhao Xueqin, an analyst with CITIC Securities.
Best Buy also announced yesterday that it was closing its two stores in Turkey in an effort to "restructure the market."
It expects savings of as much as US$70 million by 2013 from the closures and other actions in China and Turkey, its statement said.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
