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Best Buy Looks to Expand House-Brand Products
Nov 9, 2005
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Best Buy wants to take what it's learning from customers in its stores to come up with a broader line of house-branded products. The retailer is looking at ways of hooking up with start-ups and other companies to design and produce products under its own brand name, said Kal Patel, executive vice president of strategy and international at Best Buy.

With its own brands, the company could better compete on price against Wal-Mart and Dell, he said. At the same time, Best Buy could begin to sell products in relatively cutting-edge categories. Currently, the company sells some house-branded products under its Insignia brand, but mostly in established product categories, such as DVD players and TVs. Except for its Matrix PC line, Best Buy also does not deeply participate in the design of the products but relies on contract manufacturers/designers.

"For the next 5 years, we are going to see a lot of stuff coming out of the labs of Sony and Samsung, but we are also going to see a lot of innovation from a lot of other places too," he said. "There is a lot of room for collaboration with start-ups."

House brands can be difficult to pull off. Best Buy has had uneven success with its Matrix line of PCs, which it's not selling at the moment. Other retailers and some PC makers have stumbled in trying to establish LCD TV brands.

Nonetheless, Best Buy can bring a few key strengths to a start-up, Patel asserted. One, the company has shelf space all over the place. Two, starting a few months ago, Best Buy began a program to better collect feedback from customers, which gives the company information on customer preferences that may not show up, or show up in a timely manner, in sales results or via market research groups.

Best Buy has also begun to link up venture capital firms with "laboratory" stores in Southern California. "We want to play a bigger part in the (product) design process," Patel said.

On a final note, Patel proclaimed that Best Buy is ready to cut prices along with its competitors. Analysts have said that price-cutting could be particularly fierce this year. "This Christmas we will compete on price," he said. (CNET News.com)

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