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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


#1 PSport;  Multicollinearity (M40‐49 & 
M40‐49; F40‐49 F40‐49) 

#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.

All IVs are


significant.
Interpretation of IVs
Coefficients a

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

1 Electronics PSport, M40‐49,  Multicolinearity NA


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

Augusta 4.67% 50.29% 0.47% $110,900 1977


Portsmouth city  4.41% 48.31% 2.37% $81,300 1961
Chesterfield 6.18% 48.71% 3.84% $120,500 1982
Bedford 4.35% 49.87% 2.17% $127,000 1982
Prince William 7.76% 49.88% 4.15% $149,600 1983
Hampton city 6.42% 49.56% 3.31% $91,100 1969
Roanoke 4.46% 47.26% 3.47% $118,100 1974
Richmond city         7.31% 46.55% 2.76% $87,300 1955
Clifton Forge city   0% 44.11% 0% $52,800 1939
Norfolk city        6.43% 51.12% 3.27% $88,400 1959
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?