Best Buy unveils move into British online market

(Bloomberg)

The US electricals giant Best Buy will launch an online shop in the UK within the next fortnight to take the fight to its rivals Currys, Comet and Argos on to the web.

Best Buy, which opened its first UK store in May and now has five, will deliver across the UK, but not in the Channel Island or the Isle of Man. The electricals retailer will offer thousands of products online, including all those available in its stores, as well as additional lines.

Best Buy's widely anticipated e-commerce launch will take place before the middle of November, but could come as soon as this week.

The online move by Best Buy – which first revealed its intention to enter the UK market with the £1.1bn acquisition of 50 per centof Carphone Warehouse in May 2008 – will shake up the lucrative online consumer electronics market which is populated by the high street stalwarts, as well as the online specialists, such as Amazon, Dixons and Play.com.

Online sales of consumer electronics – excluding laptops, computers and mobile phones, as well as click and collect purchases – will exceed £1bn in the UK for the first time this year, according to forecasts by GfK Retail and Technology. This compares to actual total sales of £985m in 2009.

Electricals purchases on the internet made up 17.2 per cent of total sales in the UK market from 1 January to 30 September 2010, up from 15.7 per cent last year, according to the research firm.

These figures chime with those of Dixons Retail, the owner of the Currys chain and Dixons online, which in May said that online sales accounted for between 12 per cent and 15 per cent of total sales and that its internet sales passed £1bn in 2008.

Best Buy – which typically opens "big box" shops of up to 50,000 sq ft – opened its fifth UK store in Croydon last Friday and will follow this with another in Derby later this week. The electricals group will open a stores at Cribbs Causeway, Bristol, next spring, which will be followed by new shops in Nottingham, Hayes, Rotherham and Enfield.

However, the launch of Best Buy in the UK has not been without its ups and downs. It had initially planned to launch in 2009 but this was delayed until this year.

The group has backtracked on an earlier prediction before this year's launch to open up to 80 stores in the UK over three years. In July, it also emerged that Paul Antoniadis, Best Buy Europe's chief executive of branded operations, had quit the retailer just three months after its UK launch, saying he wanted to pursue his passion for start-ups.

On Friday, Carphone Warehouse will provide an update on Best Buy's UK performance when it unveils its interim results. Following its demerger from its Talk Talk broadband division last month, Carphone Warehouse now has a 50 per cent stake in Best Buy Europe, which includes the Best Buy, Carphone Warehouse and The Phone House branded stores in the UK and Europe, and Carphone's mobile phone shops in Best Buy's US stores.

Assad Malic, an analyst at Credit Suisse, said: "The existing core Best Buy Europe business will continue to benefit through 2011 from the ongoing shift to higher value smartphones away from traditional handsets." But he added: "For the Best Buy 'big box' roll-out, while we have slightly increased the level of losses for 2010-11 we believe the market is likely to assess the performance of these stores more closely once there is more disclosure around trading and margin metrics later in the year."

Top banana

* When Best Buy opened in the UK this year, it followed a long line of fellow retailers crossing the pond to make waves in a market populated by 60 million people.

Of the most recent buccaneers, few have come out of the blocks as quickly as Banana Republic, the preppy fashion chain which launched on London's Regent Street in March 2008 and now has four UK shops.

Stephen Sunnucks, the president of Europe and international strategic alliances at Gap, last month said that London is "already one of the top three performing Banana Republic stores in the world," out of more than 500 shops across the US, Canada and Japan.