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11/20/2007

Best Buy's Int'l Push Fueled by SAP

Best Buy Co.'s alliance with SAP will be a crucial component of the retailer's domestic and international growth strategy. Internationally, it will facilitate opening and operation of stores in China, Turkey and Mexico. Across the board, it will help Best Buy better manage emerging and niche businesses.

The $36 billion electronics retailer began building its international store base five years ago. It currently has locations in China and Canada. In 2008, it will open stores in Turkey and Mexico. Domestically, acquisitions over the same time period have added new retail brands and formats. Minneapolis-based Best Buy also continues to grow its core domestic business through new stores and via new initiatives in existing stores.

Under the November 14 agreement, SAP will provide the retailer's core enterprise resource management (ERP) platform. Best Buy also will use SAP for Retail Solutions for specific retail functionality. Domestic rollout of SAP will begin at Pacific Sales, a Los Angeles-based subsidiary of Best Buy. Internationally, SAP products will first be implemented in China, Turkey and Mexico.

"Best Buy has multiple channels, multiple brands and a growing international presence," said Robert Willett, CIO of Best Buy and CEO of international operations in a prepared statement. "With a single, global platform, we can continue to focus resources strategically, successfully grow the enterprise and ultimately serve as the international consumer advocate for consumer electronics."

The SAP platform will have multi-lingual, multi-currency capabilities as well as integrated information functions. These capabilities will service parts of the international business unit's retail, merchandising, supply chain, wholesale distribution, finance, human resources and store operations. Worldwide, Best Buy operates about 1,200 stores.

Best Buy entered China in 2003 through establishment of its first global sourcing office. It acquired about 130 stores in that country in 2006. These established locations, which are operated under the Jiangsu Five Star Appliance name, gave Best Buy an immediate presence in China. At the beginning of 2007, Best Buy opened its first Best Buy branded location in Shanghai.

Best Buy says it plans to open more than 20 additional Five Star stores along with "two to three" new Best Buy locations in China during fiscal 2008. Retail square footage in China will exceed 5 million square feet (1.5 million square meters) by the end of 2008. Currently, square footage in China totals about 4.6 million square feet. Best Buy entered Canada in 2002.

Pacific Sales Kitchen & Bath, one of Best Buy's "emerging businesses," was purchased in March 2006 for about $410 million. The 20-store chain sells high end home improvement products. Merchandise compliments Best Buy's appliance business.