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Best
Buy
ProfileSpecialtyretailer:consumerelectronics,homeoffice
products,
entertainment
software,
appliances
&
relatedservices
Competition:otherelectronicsstores,massmerchants,
homeimprovement
stores
Storedevelopmentprogram
Primarily
in
existing
marketsPresence:23storesinVA
Goal:increasemarketshare(18%)
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MainIssue&Goals
Expanding Market Share
Reaching Under-served Markets
Strategic Locations (i.e. major intersections)
2007 Expansion Goals90 New Stores in U.S. & Canada
Leveraging Existing Infrastructure
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ProblemwithInitialRegressions
Reg. IVs Problems
#1 PSport;M4049;F4049
Multicollinearity (M4049&F4049)
#2 PSport;IncomeM4049;
AdjustedR
Square
too
low
(0.943)
#3 PSport;Income;Mobile;M40
49
AdjustedRSquare(0.949);
MobileBeta
(0.086)
#4 PSport;Income;Housevalue
M4049;
AdjustedRSquare(0.950);PSportBeta(0.072)
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Regression#5
NoMulticollinearity Problems!
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Regression#5
95.2%ofthevarianceinthenumber
of
electronics
and
appliancestoresisexplainedbythevariationintheIVs.
All IVs are
significant.
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InterpretationofIVsCoefficientsa
417.055 102.058
.002 .000
.000 .000
8.14E-005 .000
-.211 .052
(Constant)
Number of males 40
to 49 years of age
Median household
income in 1999
Median value of
owner-occupiedhousing units
Median year structure
built
Model1
B Std. Error
Unstandardized
CoefficientsM4049:Asnumberofmales4049
increasesby
1000,
the
number
of
electronicsstoresgoesupby2.
Income:Asmedianhousehold
incomesincreases
by
$10,000,
the
numberofelectronicsstoresincreasesby2(0.0002)
Housevalue:Asthemedianvalueofowneroccupiedhousingunits
increasesby$100,000,the
number
of
electronics
stores
increasesby8.
Yearbuilt:As
the
median
age
of
a
structuredecreasesby10years(i.e.thenewerthestructure),thenumberof
electronicsstoresdecreasesby2
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SortingProcedure
RetailPotentialCalculatedbycomparingexpectednumberofelectronicsstoresinacounty
to
actual
number
of
electronic
stores
in
a
county
Savedfromregressionasunstandardized residuals
Result
shows
to
what
extent
stores
are
missingmorenegative=higherpotentialforanewstore
Sortedcountiesbyretailpotential
Seekinggreatestretailpotentialwhilefulfillingothercriteria
i i i i i
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Top10
Counties
in
Virginia
by
Retail
Potential1. AugustaCounty2. PortsmouthCity3. Chesterfield
County
4. BedfordCounty
5. PrinceWilliam
County
6. HamptonCity
7. RoanokeCounty
8. RichmondCity
9. CliftonForge
City
10.NorfolkCity
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SelectingaCounty
SixMainCriteria
1. Retail
Potential:
Atleast5lessstoresthanexpectedAll10countiesqualified
2. Population (sufficientsize):
Above
100,0003. Income (sufficientmeans):
Above$45,000
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SelectingaCounty (cont)
4. PElectronics (demand):
between
2%
and
4%Todemonstrateamarketexistsforelectronicsinthatcounty
5. PSport (Music/DVDdemand):
between4%and7%Todemonstrateamarketexistsformusic/DVDsinthatcounty
6. PMales:
atleast48percentBestBuystorestendtotargetmalesmorethanfemales
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Augusta 9.84006 1 5,696 $43,045 65,615
Portsmouthcity 9.38079 7 6,737 $33,742 100,565
Chesterfield
8.40461 36 22,262 $58,537 259,903
Bedford 8.1322 2 5,281 $43,136 60,371
PrinceWilliam 7.84942 38 22,726 $65,960 280,813
Hamptoncity 7.22696 17 11,203 $39,532 146,437
Roanoke 6.80851 7 6,955 $47,689 85,778
Richmondcity 6.34982 28 13,620 $31,121 197,790
CliftonForgecity 5.90242 0 279 $26,090 4,289
Norfolkcity 5.65534 30 14,603 $31,815 234,403
Tabulatedcriteria
to
evaluate
based
on
multiple
factors
SelectingaCounty (cont)
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Augusta 4.67% 50.29% 0.47% $110,900 1977
Portsmouthcity 4.41% 48.31% 2.37% $81,300 1961
Chesterfield 6.18% 48.71% 3.84% $120,500 1982
Bedford 4.35% 49.87% 2.17% $127,000 1982
PrinceWilliam 7.76% 49.88% 4.15% $149,600 1983
Hamptoncity 6.42% 49.56% 3.31% $91,100 1969
Roanoke 4.46% 47.26% 3.47% $118,100 1974
Richmondcity 7.31% 46.55% 2.76% $87,300 1955
CliftonForgecity 0% 44.11% 0% $52,800 1939
Norfolkcity 6.43% 51.12% 3.27% $88,400 1959
Andthe
Winner
is
Chesterfield
county
Onlycountytosatisfyallrequirements
SelectingaCounty (cont)
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SelectedCounty:Chesterfield
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RefiningtheSelection
BasedonTractLevelCensusData:
Criteria
Males/100females(>=85)
MedianHouseholdIncome(>=$49K)
Median
Value,
Owner
Occupied
Housing
Units
(>=
$90K)
Persons
per
square
mile
(>=
1,250)
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Malesper100Females,TractLevel
Eliminatingtracts
based
on
each
criterion
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Malesper100Females,TractLevel
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MedianHouseholdIncome,TractLevel
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MedianHouseholdIncome,TractLevel
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MedianValueofOwnerOccupied
Housing
Units,
Tract
Level
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MedianValueofOwnerOccupied
Housing
Units,
Tract
Level
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PersonsPerSquareMile,TractLevel
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PersonsPerSquareMile,TractLevel
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ExistingBest
BuyStore
Locations
And
the
Winneris
TwoPossible
Locations
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CensusTrack1009.15
Males/100Females:8693Malesper100Females
MedianHouseholdIncome:$52,167
Adjacentto
highest
income
area
MedianValue,OwnerOccupiedHousing:$102,800
Adjacent
to
highest
value
areaPersonsPerSquareMile: 1,9762,976
Adjacenttolarge,underservedarea
MedianAge:
M:
37.8
years
|F:
41.1
years
AverageHouseholdSize:2.36people
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Approximate12mindrivefromnearestBB
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Limitations
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AnyQuestions?
