Photo: Ian Muttoo
It’s official: Best Buy is closing its UK mega stores and buying out its mobile-phone retail partner in the region, Carphone Warehouse Group, for $1.3 billion.Last week we wrote about a few reasons why it’s leaving the market, where it initially planned to open 200 stores, then scaled its vision back to 100 (though it never introduced more than 11).
One of the biggest reasons is that “big box” stores don’t resonate with Europeans. Here are a few reasons why the British weren’t willing to give them a try:
- Best Buy marketed itself as too American. “The latest TV spot, narrated by an actor with a U.S. accent, led to comments like ‘Why is it so American?’ on the company’s YouTube site,” according to the Guardian. If you’re trying to reach a new demographic, it’s more effective to help consumers identify with a product or service.
- Best Buy wasn’t visible enough. It attempted to go up against major retailers with exponentially more stores. Dixon’s Retail has 600 stores, and Comet has 250, compared to Best Buy’s mere 11. “The market for electricals is too small in the UK for three major retailers. It is hard enough for Comet and Dixons alone to thrive, let alone an immature brand such as Best Buy,” Ben Hunt, Oriel Securities analyst, told The Guardian.
- Best Buy didn’t understand its customers. Europeans aren’t like Americans: they buy electronics only a few times a year, and prefer to purchase these products from smaller stores.
Best Buy should have known better – and done as much research on its European customers as it did a few years ago when it launched its “Customer Centric” stores in the U.S., targeting a very specific demographic with each store.
Carphone, whom it formed a joint venture with in 2008, should have as well. The mobile company’s founder, Charles Dunstone “felt he could burst on to the scene Richard Branson-like but it doesn’t work that way,” a retailer told The Guardian. “This is possibly his biggest failure.”
However, leaving the market now instead of trying to fix some very expensive problems is a smart move.
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