Best Buy to expand some Samsung mini-shops, close others

Dive Brief:

Best Buy and Samsung are changing up about a third of the 1,400 Samsung Experience mini-shops located within the electronics retailer's U.S. stores, the Minneapolis Star Tribune reports.
About 160 of the Samsung Experience stores-within-stores will close, and another 250 will expand. The Samsung employees who staff the closing stores will lose their jobs.
Samsung and Best Buy established the Samsung Experience concept in 2013 to showcase products only available at Best Buy or Samsung itself.

Dive Insight:

For a long time, concession retailing like the mini-stores within Best Buy has been an upscale phenomenon, pioneered by the likes of Louis Vuitton. But it is no longer limited to luxury retail, and Best Buy has embraced the concept in a major way by developiong store-within-store partnerships with Microsoft, Sony, Apple and more recently AT&T and Verizon.

"This collaboration with key vendors is one of the ways we showcase for our customers the latest and greatest technology in a tangible fashion," Best Buy CEO Hubert Joly, wrote in a letter to shareholders earlier this year, according to the Star-Tribune. Joly brought the concept to the struggling retailer after he arrived in 2012 as part of his turnaround plans.

Stores-within-stores aren’t just boutique areas; rather, they're controlled by the brands themselves. That sets them apart in even more than just look and feel. Their employees are not employees of the store, so rather than sharing the store’s culture, they bring the outlook and expertise of their own brand.

Ideally, the partnership of a brand within a larger store is a win for both the specialty brand and the retailer where it’s operating. Forrester Research analyst Sucharita Mulpuru says the arrangement can free up a retailer’s resources, while paying off for both the host retailer and its brand guest. “The retailer no longer has the burden of managing inventory and managing the appearance of the display,” Mulpuru told Time in 2013. “They become a ‘landlord’ of sorts.”

But there are limits, too—if a brand doesn’t find a location is profitable, it can quickly pull up stakes, leaving its partner-landlord with space to fill.

Despite the closures, Samsung told the Star Tribune in a statement that its relationship with Best Buy is "stronger than ever," adding that the mini-shops offer the broadest selection of Samsung mobile devices in one location. "We are always evaluating the Samsung Experience Shop to optimize the experience and with Best Buy, we are simply reallocating some of our resources," Samsung said.

"We are always evaluating the Samsung Experience Shop to optimize the experience and with Best Buy, we are simply reallocating some of our resources," the company said in a statement.