Best Buy tests replacing big box stores with smaller shops

Best Buy is planning an experiment. In the next fiscal year, the electronics retailer will test its ability to retain its customer base by closing large stores and opening smaller ones in the same area.

The company introduced its “small-format, digital-first store” concept back in 2022 in Charlotte, North Carolina. The 5,000 square-foot location promised a “curated selection” of products, Geek Squad services, and scan-and-go capabilities.

• Relatedly, Best Buy recently struck a deal with Bell Canada to rebrand and operate 165 small format consumer electronics stores previously known as The Source. Best Buy will provide the products and the supply chain, marketing, and e-commerce expertise, while Bell will offer telecommunications services and operate the stores.

The embrace of small format is just the latest instance of Best Buy’s efforts to reimagine its physical footprint. The company is also expanding into new markets where it has “no prior physical presence and our omnichannel sales penetration is low to measure our ability to capture untapped share,” CEO Corie Barry told investors on a Q4 earnings call.

However, Barry said Best Buy is concentrating capital investments in fiscal year 2025 on upgrading existing stores rather than store openings or major remodels.

“To be clear, we’re not remodeling every store in the fleet,” Barry said. “But what we are doing is taking, I would argue, kind of a stronger position than we ever have to ensure that the shopping experience reflects that kind of excitement and that sparkle that technology brings to life.”

The initiative tracks with an industry-wide trend to invest in stores to create a stickier experience for customers.