*from www.bloomberg.com, April 4, 2013 (To view original article click here.)
Take Away #1: Samsung Electronics Co., stepping up a battle with Apple Inc., will staff mini-stores at Best Buy Co.’s U.S. locations to showcase how its tablets, smartphones, and televisions work together.
Key Facts and Figures:
- Starting April 8, the South Korean electronics maker will open 500 Samsung Experience Shops inside Best Buy stores.
- It will take up about 460 square feet of prime space near the front of the retailer’s largest stores, said Samsung.
- Financial terms weren’t disclosed.
- Samsung will hire its own staff to demonstrate new features on the upcoming Galaxy S4 phone.
- The demonstration will also show how content can be transferred to Samsung’s smart TVs, laptops and tablets.
- Best Buy’s largest U.S. stores typically measure about 40,000 square feet.
- The companies plan to add smaller Samsung spaces by June at about 1,000 other Best Buy and Best Buy Mobile locations.
Take Away #2: The Samsung Experience Shops are a direct challenge to Apple, maker of the iPhone.
Key Facts and Figures:
- Samsung was stung by Apple lawsuits accusing the company of copying “slavishly” copying products.
- Samsung is spending hundred of millions of dollars to prove to consumers it can innovate as effectively as its U.S. competitor.
- Apple leads smartphone sales in the U.S. with 38% of the market versus 21% for Samsung, according to a March 6 research report from ComScore.
- Samsung leads worldwide with 40% of the 545.2 million smartphones shipped in 2012, according to researcher IDC.
Take Away #3: Best Buy CEO Hubert Joly, has made the store-within-a-store concept a linchpin of his plan to revive same-store sales.
Key Facts and Figures:
- Hubert Joly was hired as CEO in August to lead a turnaround at the biggest consumer electronics retailer.
- The concept has been adopted to fend off Web retailer Amazon.com Inc. and Wal-Mart Stores Inc.
- Best Buy seeks to distinguish its locations as places where consumers can explore differences between devices and operating systems, and obtain sales and service.
- Best Buy advanced 7.4% to $23.26 at 10:35 a.m. in New York, after rising 7.8%, the most in 1 ½ months.
- The shares gained 83% this year through yesterday as investors have turned positive about its prospects.
- The Samsung partnership “is another step in the right direction” says Christopher Horvers, an analyst at JPMorgan Chase & Co. in New York.
- Horvers rates Best Buy as overweight, equivalent of a buy recommendation.
Take Away #4: Apple has more than 400 stores around the world, with 150 outside the U.S. attracting 121 million visitors in the first quarter ended December.
Key Facts and Figures:
- Sales reached an all-time high of more than $6.4 billion, the company said in January.
- Apple also sells its products in dedicated sections at about 740 big-box Best Buy stores.
Take Away #5: Establishing a successful retail presence has been tricky for Samsung and other electronics manufacturers seeking to emulate Apple.
Key Facts and Figures:
- Samsung closed down a showroom in New York’s Columbus Circle last year that offered product demonstrations but no on-spot sales.
- Sony Corp. operates 22 U.S. outlets that let customers browse Sony products and purchase TVs and custom-configured PCs and tablets.
- Sony, Hewlett-Packard Co. and others in the past have paid Best Buy and other retailers to create in-store demonstration kiosks.
- Samsung’s mini stores are the first to group of all of its products in one place so customers don’t have to wander Best Buy looking for knowledgeable people.
Take Away #6: Best Buy is reallocating its store space in a part of a restructuring expected to raise operating profit by $200 million annually.
Key Facts and Figures:
- Best Buy is moving smartphones, tablet computers, and small appliances closer to the front of the store, while reducing space for slower-selling CDs and DVDs.
- Sales at stores open for at least 14 months fell 2.9% last year for a third straight annual decline.
- Consumers believe Amazon, Wal-Mart, and Target Corp. sell electronics for lower prices, Best Buy told analysts.
- David Strasser, analyst at Janney Montgomery Scott in New York boosted his 12-month price target for Best Buy yesterday to $36 from $21.
- The reallocation of space may eventually boost sales per square foot to $901 from $851, and gross profit to $217 from $210, said Strasser.
- Joly is spending more to train employees to sell phones as rising demand creates opportunities to sell accessories and warranties.
- Most of Best Buy’s customers who initially shop online for phones wind up purchasing them in stores, said Scott Anderson, VP of smartphones and tablets.
- “People are still wanting to come in and kick the tires of the phones,” he said.
*To view original article from www.bloomberg.com click here.