News

Best Buy to sublease space, shrink stores

June 23, 2011

Big box retailer Best Buy Co. Inc. is planning to sublease parts of its stores to smaller retailers, according to StreetInsider.com.

The piece cites the LA Times saying Best Buy is looking to shrink average square footage of its stores from 45,000 square feet to 36,000 per store, a 20 percent shrinkage.

According to the post, increased competition from online e-tailers, and low sales of DVDs and music, are making it difficult for retailers to maintain large retail locations.

"Retailers just don't need as much space as they once did," a Keybanc Capital Markets analyst said in the article. "Across the retail industry there is an effort to reduce the size of your stores as retail and purchases increasingly occur online rather than through brick-and-mortar stores."

Best Buy is aiming at leasing 4 to 15 thousand square feet at 46 stores in the Southern California region, likely to retailers without shared interests.

The article says Best Buy is also looking to emulate Walmart by opening smaller specialty outlets, dubbed Best Buy Mobile, featuring smartphones and tablet PCs.