Best Buy opens outlet centers in five markets

Best Buy had some extra space and an issue of quickly moving out clearance-priced items to make room for new models.

The extra space came in markets where the Richfield-based electronics retailer had moved or consolidated stores but where leases on the old space had not run out.

So in five markets, Best Buy now has outlet stores. There are no current plans to add one in Minnesota.

Spokesman Jeff Shelman said Best Buy has not added it as a new category for the company.

"These outlets are in places where we recently relocated stores or where we already have real estate we're responsible for," he said.

The outlets in Moreno Valley, Calif.; Newark, Del.; Raleigh, N.C.; and Farmers Branch and San Antonio, Texas, are more an answer to an immediate need, especially as the appliance business grows with floor models that take up a lot of space.

The retailer's website lists big appliances, TVs and computers among the stock at the stores. All were floor models, had their boxes opened or on clearance.

"Best Buy is smart to leverage its existing physical space to sell its overstocks for a number of reasons," said retail consultant Carol Spieckerman. "Doing so will allow Best Buy to dedicate resources to its outlet operation rather than these locations becoming a distraction to its mainline business. Running the outlet stores separately will also ensure that current technologies and solutions are showcased in its full-price locations without visual clutter or shopper diversion, potentially increasing full-price sales."

Dipping its toe into the outlet sector also gives Best Buy an idea of whether down the road it might want to follow the lead of many fashion retailers and create or buy products specifically for the outlets, she said.

"Outlet stores can be quite profitable, which is why some retailers have arguably gone a bit overboard with them," Spieckerman said. "Hopefully Best Buy will strike the right balance."

Competing in the outlet sector also can be tricky.

"It's worth nothing that outlet growth nationally has slowed in the past year," said Pete Madden, a director in the retail practice at global consulting firm AlixPartners. "The fact is, while outlets can be an upside for retailers looking to expand their customer base or for clearing merchandise, that upside can turn into downside if they're just stealing sales from existing stores or weakening the brand."

Catherine Roberts • 612-673-4292