INTERVIEW-Best Buy Canada tackles online competition

Mon Jul 9, 2012 11:45am BST

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* Will match prices at Canadian online retailers

* Piloting smaller format stores

By Allison Martell and Alastair Sharp

TORONTO, July 6 (Reuters) - Consumer electronics retailer Best Buy Inc's (BBY.N) Canadian division is pushing back against "showrooming", where customers test drive gadgets in store only to buy them online, the company's Canadian head told Reuters on Friday.

Best Buy Canada will now match prices posted by Canadian online retailers, not just bricks-and-mortar stores. New kiosks in stores also let customers order products for pick up or home delivery right away, including categories as diverse as cell phones, toasters, and hammocks that may not be available on site.

"It's making showrooming obsolete," said Best Buy Canada President Mike Pratt. "The winner's not the pure bricks-and-mortar store, the winner's not the pure web play - the winner is the combination."

Pratt said most consumers still want and need advice and service when they shop, especially for electronics.

Best Buy's acting Chief Executive Mike Mikan said at the company's June annual meeting that he would tackle showrooming, and look for ways to reduce square footage at the big-box retailer. [ID:nL1E8HLJNR]

Mikan's predecessor, Brian Dunn, left abruptly in April, during an internal investigation that eventually found he had engaged in an improper relationship with a female employee. [ID:nL2E8FA3ZK]

Critics complain that under Dunn, Best Buy, which has traditionally focused on selling consumer electronics, had become more like a showroom for Amazon.com Inc (AMZN.O) and its peers.

The company's shares spiked this week on expectations that founder Richard Schulze, who abruptly resigned from the board last month, might present a buyout plan, but the stock fell back on word that any such bid was unlikely to come soon. [ID:nL2E8I26NS]

The company plans to cut 2,400 jobs, including 600 of its Geek Squad employees, a spokesman said on Friday. The cuts come on top of U.S. store closings announced in March. [ID:nL2E8I6EHR]

Christopher Bennett, spokesman for Best Buy Canada, said there are no job cuts planned in Canada.

SMALL FORMAT EXPANSION

Pratt said Best Buy Canada will launch two 5,000 square foot pilot stores this fall under its Future Shop banner, one in Vancouver and one in Brockville, Ontario. Best Buy and Future Shop big-box stores average more than 25,000 square feet.

"We believe there's a long runway for that type of store, because we can get into smaller markets across Canada," Pratt said.

There are no plans to reduce the company's footprint in major Canadian markets, he said. In the United States, the company plans to close 50 of its 1,100 biggest stores.

The Canadian division is also expanding its Best Buy Mobile cell phone kiosks in shopping malls. It has about 40 now, and is aiming to boost that to 150 to 200 stalls in the next two to three years.

(Reporting By Allison Martell; Editing by Peter Galloway)

((allison.martell@thomsonreuters.com)(+1 416 941 8196)(Reuters Messaging: allison.martell.thomsonreuters.com@reuters.net)) Keywords: BESTBUY CANADA/

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