Best Buy Targets Appliance Sales with Samsung Open House



Samsung Open House

Leading consumer electronics retailer Best Buy (BBY) has partnered with Samsung to open in-store shops called Samsung Open House that will display Samsung (SSNLF)(005930.KS) home appliances. Best Buy rolled out Samsung Open House in early June in its stores in Chicago and Minneapolis. The company expects to open more such shops-within-shops in select Best Buy locations by the end of 2015.

Samsung Open House will include an 85-inch life-size touchscreen called CenterStage, which can give Best Buy customers an interactive virtual tour of Samsung’s home appliance products with photos, videos, and custom features.

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Focus on appliances

Appliances accounted for only 7% of Best Buy’s fiscal 2015 domestic segment sales. However, the category registered the highest same-store sales growth of 7.5% in fiscal 2015, which ended January 31, 2015, compared to other all other categories—like consumer electronics and entertainment. Appliances accounted for 24.0% of rival Aaron’s (AAN) store-based revenues in the fiscal year ended December 31, 2014.

According to Euromonitor International, US consumer appliances volumes grew by 3.0% in 2014. This was the strongest growth registered by the industry in over a decade. It also marked the first time that the category crossed the half billion unit sales mark. The growth in 2014 was a result of higher sales of small appliances and better macro economic conditions.

Best Buy set to capture opportunities

With an improved job and housing market, the demand for home appliances is likely to rise. Best Buy’s Samsung Open House will help in driving more consumer traffic and delivering a better shopping experience. It will also help the company in competing with Internet retailers like Amazon (AMZN).

Aside from Samsung Open House, Best Buy is enhancing the display of appliances by opening more Pacific Kitchen & Home stores. The company plans to open ~60 Pacific Kitchen & Home stores-within-a-store to end the current fiscal year with 177 such stores.

Best Buy makes up ~0.1% and 0.4% of the SPDR S&P 500 ETF (SPY) and the Consumer Staples Select Sector SPDR Fund (XLY), respectively.


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