Presented by
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
Reg. IV’s Problems
PSport; Multicollinearity (M40‐49 &
#1
F40‐49)
M40‐49; F40‐49
PSport; Income Adjusted R Square too low
#2
(0.943)
M40‐49;
PSport; Income; Mobile; Adjusted R Square (0.949);
#3
Mobile Beta (‐0.086)
M40‐49
PSport; Income; Adjusted R Square (0.950);
#4
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.
All IVs are
significant.

Interpretation of IVs
Coefficients a
Unstandardized
Coefficients
M40‐49: As number of males 40‐49
Model B Std. Error
1 (Constant) increases by 1000, the number of
417.055 102.058
Number of males 40
electronics stores goes up by 2.
.002 .000
to 49 years of age
Median household
.000 .000
income in 1999
Income: As median household
Median value of
incomes increases by $10,000, the
owner-occupied 8.14E-005 .000
housing units
number of electronics stores
Median year structure
-.211 .052
increases by 2 (0.0002)
built
Yearbuilt: As the median age of a
Housevalue: As the median value
structure decreases by 10 years (i.e. the
of owner occupied housing units
newer the structure), the number of
increases by $100,000, the
electronics stores decreases by 2
number of electronics stores
increases by 8.

Summary:
Regressions & Disregarded Variables
Electronics PSport, M40‐49, Multicolinearity NA
1
F40‐49 (Males & Females)
Electronics PSport, M40‐49, Removed Females 0.943
2
Income (Males=main target) (Prefer > 95% )
Electronics PSport, M40‐49, Added Mobile (least 0.949
3
Income, Mobile important IV)
Electronics PSport, M40‐49, Replaced Mobile 0.95
4
Income, (least important IV)
Housevalue
Electronics Housevalue, Replaced PSport 0.952
5
M40‐49, Income, Final Answer!
(least important IV)
Yearbuilt

Sorting Procedure
Retail Potential
Calculated by comparing expected number of electronics stores in a
county to actual number of electronic stores in a county
•Saved from regression as ‘unstandardized residuals’
•Result shows to what extent stores are “missing”
•more negative = higher potential for a new store
•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
Augusta ‐9.84006 1 5,696 $43,045 65,615
Portsmouth city ‐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
Prince William ‐7.84942 38 22,726 $65,960 280,813
Hampton city ‐7.22696 17 11,203 $39,532 146,437
Roanoke ‐6.80851 7 6,955 $47,689 85,778
Richmond city ‐6.34982 28 13,620 $31,121 197,790
Clifton Forge city ‐5.90242 0 279 $26,090 4,289
Norfolk city ‐5.65534 30 14,603 $31,815 234,403

Selecting a County (cont)
And the Winner is… Chesterfield county
Only county to satisfy all requirements
4.67% 50.29% 0.47% $110,900 1977
Augusta
4.41% 48.31% 2.37% $81,300 1961
Portsmouth city
6.18% 48.71% 3.84% $120,500 1982
Chesterfield
4.35% 49.87% 2.17% $127,000 1982
Bedford
7.76% 49.88% 4.15% $149,600 1983
Prince William
6.42% 49.56% 3.31% $91,100 1969
Hampton city
4.46% 47.26% 3.47% $118,100 1974
Roanoke
7.31% 46.55% 2.76% $87,300 1955
Richmond city
0% 44.11% 0% $52,800 1939
Clifton Forge city
6.43% 51.12% 3.27% $88,400 1959
Norfolk city

Selected County: Chesterfield

Refining the Selection
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?