Best Buy set to open area stores

June 08, 1994|By Jay Hancock | Jay Hancock,Sun Staff Writer

Best Buy Co. Inc. plans to open six of its warehouse-style stores in the Baltimore area next spring, challenging Circuit City and Luskin's for the biggest chunk of the region's consumer electronics business, industry sources said.

One likely result, retail analysts said, will be less-expensive TVs, camcorders, stereos and VCRs.

Best Buy, the nation's No. 3 consumer electronics chain, and Richmond, Va.-based Circuit City Stores Inc., No. 1, are rapidly adding stores in each other's territories. Price wars have been common.

"I think consumers will be the winners," said Edwin Underwood, an analyst with Scott & Stringfellow Inc., a Richmond investment firm.

Minneapolis-based Best Buy had already confirmed that it will open several stores in the Washington area this year. The company has signed six Washington-area leases so far and is looking for more sites there, spokeswoman Susan Hoff said yesterday.

The Baltimore expansion has not been made public. Ms. Hoff said she could offer no information on Best Buy's plans for the region.

But sources familiar with the company said it has engaged KLNB Realtors of Towson to help it find Baltimore-area sites for six stores that would open next spring. Best Buy is still in the preliminary stages of site selection, the sources said.

KLNB principal Thomas C. Martel confirmed that the brokerage is scouting sites for Best Buy but declined to offer other details.

Best Buy's newest stores are 45,000 square feet in size, the size of a large supermarket.

The company's interest in Baltimore isn't surprising to analysts. In February it signaled it would march on Circuit City's East Coast turf by opening a Virginia warehouse that industry experts believe eventually will serve 120 stores across the region. Best Buy has fewer than 25 Eastern stores now.

"They're expanding like crazy," trying to increase buying clout with vendors and to become established in markets ahead of competitors, said Steven M. Ashley, retail analyst with Milwaukee investment firm Cleary Gull Reiland & McDevitt.

Best Buy already competes with Circuit City in Atlanta, Chicago and a few other markets. In those areas, advertising blitzes and price-slashing have been common as each player fights for sales.

Best Buy had $3.01 billion in sales in its most recent fiscal year. Circuit City had $4.13 billion. Tandy Corp., whose Radio Shack stores are more focused on electronic components and small appliances, is the No. 2 U.S. electronics chain, with $4.10 billion in sales last year.

Best Buy and Circuit City both sell VCRs, CD players, tape decks and TVs in superstore formats. But Circuit City is more focused on household appliances such as washers and refrigerators; Best Buy sells more computers.

Circuit City offers full-service stores staffed by commissioned salespeople. Best Buy has fewer employees per store, and salespeople are on straight salary.

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