China's top appliance chains Gome and Suning have been unusually
quiet of late over competition from top US consumer electronics
retailer Best Buy, which opened its first store outside North
America on December 28 in Shanghai.
This is a big contrast to the panic after Best Buy bought
Jiangsu Five Star Appliance Co in May last year.
The acquisition not only caused fear throughout the industry, it
also pushed Gome, China's largest appliance retailer, to speed up
its takeover of Shanghai-based China Paradise. Gome also blocked
Best Buy in taking over a commercial space in Beijing five months
ago.
Best Buy is not likely to pose an immediate threat to its
Chinese rivals, despite the fact that its 8,000-square-meter store
in Shanghai's downtown Xujiahui is its biggest worldwide. Gome and
China Paradise have more than 800 stores and Suning has more than
430 outlets across the country. In Shanghai alone, the new Gome has
110 stores.
But a visit to the four-story Best Buy store shows that the
Fortune 500 company has brought more than just a new retail outlet
to the market. The Best Buy store is revolutionary in the shopping
experience it offers.
The clean, spacious and brightly lit store, where products are
arranged according to category rather than by manufacturer,
contrasts sharply to the often dingy Chinese appliance stores. In
this sense, the Best Buy store is a luxury version of those run by
its Chinese rivals.
Product displays at Best Buy are customer-friendly. Open shelves
allow shoppers to try digital cameras, video cameras and mobile
phones. In Chinese-run stores, shoppers almost always have to ask
shop assistants for help to inspect items.
And Best Buy assistants play a vital role in making shopping a
pleasant experience.
Unlike Gome and Suning, where many shop assistants are actually
factory representatives who peddle their own brands, Best Buy hires
all shop staff directly, so they are more likely to provide
impartial advice to customers.
Best Buy has also brought a new payment method to the Chinese
market. Unlike the lengthy accounts process of its Chinese rivals,
Best Buy pays its own inventory and sources its products globally,
with 72 percent of its stock reportedly from China.
(China Daily January 9, 2007)