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Best Buy Tries To Solve Big Box Puzzle

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Shoppers look for bargains in the video game section of a Best Buy store in Orlando, Fla. (AP Photo/John Raoux) | AP
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As the swift rise of e-commerce takes its toll on traditional stores, especially ones selling electronics, and critics question big box stores' future, Best Buy CEO Hubert Joly is determined to prove that the retailer still has a place in a world altered by massive online sales.

Best Buy’s brick-and-mortar stores are shifting as Joly and his team try to solve the many puzzles of big box retail. It's now rolling out Samsung shops, first announced in early April, within its stores. The shops look similar to Apple stores, with spacious, minimalist design and tables fitted with propped-up gadgets and laptops, inviting people to try them out.

The shops will sell all Samsung phone, laptops and tablets, and their accessories, and will be staffed with Samsung consultants, who will work with Best Buy employees to aid customers. Consultants also team with Best Buy’s Geek Squad tech support squads to help customers with Samsung gadgets.

Shop-in-shops like Samsung’s serve as part of an initiative to make Best Buy’s stores more efficient, said Joly on Wednesday at a news conference. The addition will increase space for the store's most profitable items, while trimming the weaker parts of Best Buy’s portfolio. Joly referred to it as “floor-space optimization.”

The Samsung stores are, for the most part, replacing some of the store space occupied by physical media, like CDs and DVDs, which have rapidly shrinking profit margins. Best Buys currently devote 20 percent of floor space to physical media, and that’s far too much, he said.

Best Buy unveiled another initiative, a new store prototype, less than a year ago but then halted the plan. The new model took many design elements from Apple stores, such as the Genius Bar help desk, and had been rolled out to 50 locations by November, when Joly made the decision to stop expansion.

The redesign wasn't Joly’s brainchild. It was from a previous era, instituted by former Best Buy interim CEO Mike Mikan. But Joly’s focus has turned to the battle against online competition, shifting his product mix and shop-in-shop deals with various brands.

The prototypes required a “significant investment” on a per-store basis, Joly told reporters. Changing light fixtures, for instance, was not one of customers’ top demands, and he felt that Best Buy’s funds would be better allocated elsewhere. Best Buy spokesman Jonathan Sandler characterized the prototype stores as an “evolving process.”

Shop-in-shops have long been used by retailers to create branded experiences in stores. The tactic attracted a deluge of negative attention, however, as a part of former J.C. Penney CEO Ron Johnson’s failed quest to revive the ailing department store chain.

Joly declined to comment about J.C. Penney’s strategy when pressed by reporters at the launch. Instead, he simply noted that Best Buy has featured Apple shops in its stores for years, and they’ve performed well thus far. “The judge is the customers,” said Joly.

He stressed that the Samsung shops are going to be a big part of Best Buy’s future, and key in its plan to turn around the embattled consumer electronics retailer.

“Generally speaking, the Samsung stores will be in prime locations” within Best Buy’s stores, Joly told The Huffington Post.

Though they’ll come in various sizes, depending on the particular store, the largest will be around 460 square feet.

“This went very quickly because it made so much sense,” Joly said. “It’s as permanent as you get in consumer electronics.”

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