Best Buy is riding high and heading west.

After gaining a foothold in Western Canada in 2003, with the opening of three stores in Edmonton and two in Winnipeg, the North American specialty retailer of consumer electronics, personal computers and entertainment software is now setting its sights on the Vancouver market.

British Columbia will get its first Best Buy in the Greater Vancouver region, and the possibility of a second before the end of the year.

Best Buy Canada Ltd., a wholly owned subsidiary of Minneapolis, Minn.-based Best Buy Co., Inc., will focus its expansion plans on entering two Canadian markets along with beefing up its Ontario presence, where the company operates 14 stores, eight in the Greater Toronto area.

Best Buy photo
Best Buy currently has 19 stores across Canada, with plans to open outlets in Greater Vancouver and Calgary this year.

“Our new key markets are Vancouver and Calgary,” said Lori DeCou, Best Buy Canada’s director of corporate communications.

“There are no plans to move into Quebec yet or Atlantic Canada. They are not on the radar for this year.”

Deeper penetration into Western Canada had been delayed in part by the need to find the right real estate. It was also slowed by limitations on how many stores the company could open at one time, given that it is also proceeding with the expansion of the Future Shop chain, which it purchased in August 2001 for $580 million Cdn.

“We can only open so many stores a year from a sheer volume capacity,” said DeCou, who pointed out there were no Best Buy stores in Canada until late 2002.

“We opened nine (Best Buy) stores in the first year and 11 last year – and we’re still opening Future Shops as well.”

As Best Buy heads to a total store count of between 60 and 70 for the Canadian marketplace, the objective is to open eight to 12 new storefronts this year along with three to five additional Future Shops.

“From a resource base, that’s the level we can keep pace with,” said DeCou, “and it’s been really rapid. Four years ago in May we had 80 Future Shops, today we have 127 stores – 108 Future Shops and 19 Best Buys. We’ve opened 47 stores in four years.”

Best Buy Canada Ltd.’s American parent is coming off a strong December, with a 19-per-cent increase in revenue for a total of $4.64 billion US.

But its international operations, composed of Canada’s 108 Future Shops, 19 Best Buys and futureshop.ca, posted an even stronger revenue gain at 22 per cent compared to the previous December.

December 2003 revenue totals were $664.9 million Cdn; comparable store sales gains came in at 6.5 per cent.

In British Columbia, Best Buy’s first store will be in Langley, at 200th Street and 64 Avenue. The targeted opening date is set for this summer. Company officials did not disclose the location of its second store.

As for Victoria and Kelowna, the two markets are potential expansion sites but there are no immediate plans to open any Best Buy stores there.

Meanwhile, Best Buy Canada recently beefed up its Future Shop presence in B.C., opening a new state-of-the-art flagship store in the heart of Vancouver. It also relocated its stores in Coquitlam and Nanaimo late last year.

The 30,000-sq.-ft. store, at the corner of Robson and Granville, sits in the heart of the entertainment district and features a selection of products and services tailored specifically to the urban market, with a focus on digital imaging, mobile computing and entertainment.

The store also has additional significance to the company as “Vancouver gave birth to the brand with the first-ever Future Shop, a 4,000-sq.-ft. store on Broadway, more than 20 years ago,” said DeCou.

The new 37,000-sq.-ft. Coquitlam store opened in Coquitlam Centre, while the new 25,000-sq.-ft. Nanaimo store is up and running at the Country Club Shopping Centre. Best Buy Canada stores, which are typically 30,000 sq. ft. or 36,000 sq. ft., employ between 100 to 130 staff members depending on the size of the location. These new stores will also include the TechZONE feature, a section with interactive learning pods and dynamic displays designed to help customers understand how the latest technology fits together and can enhance their lifestyle.

Product selection, once movies, gaming, and software are taken out of the mix, will be about 60 per cent different than what customers will find at Future Shop.

Best Buy sales staff are non-commissioned, while Future Shop retains its commissioned sales force model.

In markets such as Edmonton or Toronto, where Best Buy and Future Shop compete with each other, both stores are thriving, according to company officials.

“The cannibalization of the Future Shop store is less than what we anticipated and offset by the overall growth from adding a second brand,” said DeCou.

For retail analyst John Williams, a senior partner and founder of the Toronto-based J.C. Williams Group, the fact the company has increased its market share is not surprising. “They raised the bar and just heated up the competitive fire,” said Williams.

“They’ve been recently ranked as one of the best-managed retail companies in the U.S.A. They’re a very skilled and professional retailer. Now, instead of having one big-box category killer in that segment, they’re having two going at each other and the competition.”

While he said that some of the competitors might be taking a hit, “it’s a good thing for everybody that electronics and digital (products) are one of the brightest spots on the Canadian retail scene. This expansion of stores comes at a time when that segment is rapidly expanding, meaning there is less damage to the competitors and it’s better for consumers.”