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Retail

Best Buy's Marc Spence

Thu 29 Apr 2010 6:00am GMT / 2:00am EDT / 11:00pm PDT
Retail

Head of entertainment talks pre-owned, competition and USPs ahead of the opening of first UK store

Best Buy

With operations in the United States, Canada, Europe, China and Mexico, Best Buy is a multinational retailer...

bestbuy.com

After 12 months at the planning stage, the UK's first Best Buy store opens tomorrow in Thurrock, Essex, standing in the shadow of Lakeside shopping centre and amidst a sprawl of out-of-town retail competition. The chain had promised gaming would be a prominent category and its flagship store certainly doesn't disappoint. A dedicated games room - which lets staff give personalised demonstration of hardware and games - is housed separate to a vast games section, while console demo pods are replaced by TVs and consoles in spaces with more than enough room to swing several Wii controllers.

Product space is equally expansive with a wide range of both new and pre-owned games on the shelves. Ahead of the doors opening on the new retail offering, GamesIndustry.biz spoke to the retailer's head of entertainment, Marc Spence - formerly MD of GAME Europe, and buying director for DSG - about competitors, digital plans and selling pre-owned product.

Q: So this is the first Best Buy store to open in the UK. Why was the decision made to open in Essex and what's the plan now going forward?

Marc Spence: Going forward we've openly stated that we're looking to open between 8-10 stores this year with 70ish stores over five years. Thurrock, if you look around at the retail park here and across the road is one of the most premier parks in the UK. You've got Marks & Spencer, you've got Tesco, you've got Toys R Us, PC World - it's a premier park. And we wanted a large environment to open our first store.

Q: You're also surrounded by competitors. There's a Comet directly opposite...

Marc Spence: Yes, we're got Comet across there, we've got Curry's around the corner, PC World, Toys R Us, we've got Asda and that has entertainment products as well and there's Tesco Extra, so we've got the majority of competitors in the park itself. Thurrock shopping centre is walking distance from here and that also has GAME, HMV etc. So I think we have all of our competitors right beside us here.

Q: So what's the unique selling point that Best Buy has in order to compete with all of that?

Marc Spence: I think from a gaming perspective the interactive element is a huge differentiator for us to our competitors. And that is something we expect will drive people here to look at new product. We have a competitive range that is bigger than the majority in this space. We've got knowledgeable people, we've brought on board staff that have been through a nine week training programme - the Blue Shirt academy - but we're also got people who are passionate gamers, enthusiastic about the categories that they sell. Our product knowledge is superior to most.

We obviously stock all of the hardware formats as well so this is, in effect, a one-stop shop. We sell hardware and software - the majority of our competitors sell one or the other.

Q: You do have a very wide range of games. So, unlike perhaps stores such as Dixons, you're really trying to go up against the specialist retailers here as opposed to just selling games as an add-on?

Marc Spence: Most definitely. Gaming for Best Buy is not an add-on. It's an integral part of the Best Buy business, so it's not just on the peripheral. It's absolutely fundamental to what we do. We do see ourselves as a specialist in that sense. So yes, we do believe we can go head-to-head with the best in this market space. As you can see, we've given the space to it, we've got the range, we will be competitive on price, we have pre-owned and we've got pre-owned that can be offset against anything else in the store, not just on gaming. So again, a differentiating factor. We have got dedicated Blue Shirts working on entertainment, you will find people at all times within entertainment. It's not going to be self-service - there will be people there to help you.

In our gaming room we've got people who can take you through the whole process and sell you a proposition - a solution. Not just an Xbox, but an actual solution to get online. That might just be an Xbox plus accessories or it might be an Xbox, accessories and a Sky or Virgin contract. We can do that whole solution for you - again something the majority can't do. That's why we believe we can go head-to-head with anybody in this space.

Q: How important is pre-owned going to be for business? It must be a contentious issue with publishers, the fact you're selling pre-owned next to new...

Marc Spence: It's an important part of the proposition for us. The customers told us that they wanted to see second-hand games and, generally speaking, there's a cycle of buying a game then trading it in against the price of a new one. We did customer research and the customers said, "absolutely, we want second-hand."

So, although it's relatively new to Best Buy in the US, we decided that it had to be part of the proposition from day one. Yes, we read a lot about what publishers do and don't think about pre-owned games. I think the majority of those we've worked with so far have been very supportive. They understand the need to have pre-owned. I think we've got a very strong relationship with the vendor community. Although we buy directly from Centresoft in the majority of instances, and from Gem and Microsoft, we have got very strong direct relationships with all of the gaming vendors right across the board.

And they have had an input into this store. Myself and James Cook who runs gaming and is ex-HMV, ex-Virgin and WH Smith - he's got a lot of gaming knowledge and a direct relationship with all of the vendors. He's been on board for well over a year and we've been talking to the vendor community about the proposition for that length of time. They've helped us to build this. We've been asking for their input for over 12 months.

Q: Have you partnered with someone to get started with the pre-owned product? You've already got a really wide range of games in the store.

Marc Spence: Yes, we have partnered with somebody. What I didn't want to do, as I saw another competitor do who started with nothing and then tried to build it, it took a long time. So we decided to have an offering on day one. Because it will take some time to build that proposition. We firmly believe that with our buying and selling prices, people will come to us rather than our competitors.

At the end of the day, gaming in an out-of-town space like this is unique to the UK but it's not unique to retail. In the US we all know about Best Buy, Target and Walmart etc. But even in Spain, France and so on you've got Media Markt, and they're very successful at selling games, CDs and DVDs from a big box retail park.

Q: How does Best Buy's online plans tie up with the in-store proposition?

Marc Spence: We're launching online in the autumn so we're still working through that process. But we will have gaming - it'll be an integral part of that site when it launches.

Q: Do you have any plans for forms of digital sales online?

Marc Spence: We do. Whether we'll launch it on day one is TBC. We've obviously got a lot on the music side - we've got a very strong relationship with Napster as we own them. But we are looking at the whole digital offering. We will launch digital but I can't say exactly when that'll be.

Q: When Best Buy announced plans to move into Europe and the UK, there were rumours it would be looking at buying its way in through competitor acquisitions. Is that still a likelihood?

Marc Spence: As far as I'm aware it's not something that we're currently looking at. But I don't think you can ever say never. We're looking to grow in this market space - the key for us is the get the right property.

Q: You're launching in the UK at a time that GAME has announced the closure of about 150 stores. Is that a concern, or is it an opportunity?

Marc Spence: I don't think it's a worry in the slightest. I think this is still a very very good market. The UK gaming market is still very strong and yes it might have had a difficult time over the last 12 months. I think with Move and Natal coming later this year, we've just had Splinter Cell and we've got some great products coming that I think will really change the face of gaming this autumn. So I'm really looking forward to seeing them at E3 to see how they've come on in the last 12 months and I think now is a great time to be entering the market.

And we're very keen to show what we can do. We think for a demonstration purpose the customers will come to us to see the products. At a friends and family event we held last weekend this area was one of the busiest areas in the store. We had kids playing, adults playing, we had the gaming room full and the comments that we received back were very very positive. The gaming area feedback was loud and clear - the customers we had in-store last weekend loved it.

Marc Spence is head of entertainment at Best Buy. Interview by Kath Brice.

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