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Evan Zaletel
Gray Bigler
Alex Knecht
Jesse Kedy
Best Buy Profile
Specialty retailer: consumer electronics, home‐office
products, entertainment software, appliances &
related services
Competition: other electronics stores, mass‐merchants,
home improvement stores
Store development program
Primarily in existing markets
•Presence: 23 stores in VA
•Goal: increase market share (18%)
Main Issue & Goals
• Expanding Market Share
• Reaching Under-served Markets
• Strategic Locations (i.e. major intersections)
• 2007 Expansion Goals
– 90 New Stores in U.S. & Canada
– Leveraging Existing Infrastructure
Problem with Initial Regressions
#2 PSport; Income Adjusted R Square too low
M40‐49; (0.943)
#3 PSport; Income; Mobile; Adjusted R Square (0.949);
M40‐49 Mobile Beta (‐0.086)
#4 PSport; Income; Adjusted R Square (0.950);
Housevalue PSport Beta (0.072)
M40‐49;
Regression # 5
No Multicollinearity Problems!
Regression # 5
95.2% of the variance in the
number of electronics and
appliance stores is explained by
the variation in the IVs.
Unstandardized
Coefficients
Model B Std. Error M40‐49: As number of males 40‐49
1 (Constant) 417.055 102.058 increases by 1000, the number of
Number of males 40
to 49 years of age
.002 .000 electronics stores goes up by 2.
Median household
.000 .000
income in 1999
Median value of
Income: As median household
owner-occupied 8.14E-005 .000 incomes increases by $10,000, the
housing units
Median year structure
number of electronics stores
-.211 .052
built increases by 2 (0.0002)
Housevalue: As the median value Yearbuilt: As the median age of a
of owner occupied housing units structure decreases by 10 years (i.e. the
increases by $100,000, the newer the structure), the number of
number of electronics stores electronics stores decreases by 2
increases by 8.
Summary:
Regressions & Disregarded Variables
•Sorted counties by retail potential
•Seeking greatest retail potential while
fulfilling other criteria
Top 10 Counties in Virginia
by Retail Potential
1. Augusta County
2. Portsmouth City
3. Chesterfield County
4. Bedford County
5. Prince William County
6. Hampton City
7. Roanoke County
8. Richmond City
9. Clifton Forge City
10.Norfolk City
Selecting a County
Six Main Criteria
1. Retail Potential:
At least 5 less stores than expected
All 10 counties qualified
2. Population (sufficient size):
Above 100,000
3. Income (sufficient means):
Above $45,000
Selecting a County (cont)
4. PElectronics (demand):
between 2% and 4%
To demonstrate a market exists for electronics in that county
5. PSport (Music/ DVD demand):
between 4% and 7%
To demonstrate a market exists for music/DVDs in that county
6. PMales:
at least 48 percent
Best Buy stores tend to target males more than females
Selecting a County (cont)
Tabulated criteria to evaluate based on multiple factors
Based on Tract‐Level Census Data:
Criteria
‐ Males/ 100 females (>= 85)
‐ Median Household Income (>= $49K)
‐ Median Value, Owner‐Occupied Housing Units (>=
$90K)
‐ Persons per square mile (>= 1,250)
Males per 100 Females, Tract Level
Eliminating tracts based on each criterion
Males per 100 Females, Tract Level
Median Household Income, Tract Level
Median Household Income, Tract Level
Median Value of Owner‐Occupied
Housing Units, Tract Level
Median Value of Owner‐Occupied
Housing Units, Tract Level
Persons Per Square Mile, Tract Level
Persons Per Square Mile, Tract Level
Two Possible
Existing Best
Locations
Buy Store
Locations…
And the
Winner is…
Census Track 1009.15
Males/ 100 Females: 86–93 Males per 100 Females
Median Household Income: $52,167
Adjacent to highest income area
Median Value, Owner‐Occupied Housing: $102,800
Adjacent to highest value area
Persons Per Square Mile: 1,976–2,976
Adjacent to large, underserved area
Median Age: M: 37.8 years | F: 41.1 years
Average Household Size: 2.36 people
Approximate 12 min
drive from nearest BB
Limitations
Any Questions?