Posted on: Tuesday, May 21, 2002

Best Buy plans to open Pearl City store

By David Butts
Advertiser Staff Writer

Best Buy Co., the nation's largest electronics retail chain, will open its first store in Hawai'i in Pearl City, the latest big-box retailer to make inroads in the state.

The 45,000-square-foot store is scheduled to open next spring on the diamondhead side of the Home Depot on Kamehameha Highway, just two miles from Best Buy's main nationwide competitor, Circuit City.

Terms of the deal were not disclosed.

Best Buy will begin hiring for 125 to 150 new positions three to four months before the opening, said Connie Molby, a spokeswoman at Best Buy headquarters in Eden Prairie, Minn.

"We did a lot of consumer research and found the Pearl City location would be a good business model," said Molby, adding that consumer traffic was a key element in that decision.

Best Buy's arrival comes as Wal-Mart, Costco and Home Depot move forward with plans to expand in the Islands.

Wal-Mart concluded a deal last week to buy the 10.5-acre Ke'eaumoku superblock near Ala Moana Center and build two 150,000-square-foot stores.

A Costco in Honolulu and a Home Depot in Kona are scheduled to open this year.

The arrival of a Best Buy also is expected to put pressure on local and national electronics retailers in the state, including its main competitor Circuit City.

The two retailers have been in a pitched battle for consumers. Best Buy pulled ahead of Circuit City in 1996 as the largest U.S. electronics chain by sales, even though it has fewer stores — 494 versus 600.

Both stores are doing all they can to take a bigger piece of the annual $93 billion market in consumer electronics.

Best Buy has better sales nationwide per square foot at $847, compared with $485 at Circuit City.

To take advantage of that edge, Best Buy is expanding rapidly. Hawai'i is part of that move as the company adds stores at a pace of 60 a year for the next two years, Molby said.

"They have saturated the high-density markets and are reaching further than they have before," said Mike Porter, an analyst who covers Best Buy for Morningstar Inc. "It seems to make sense that they enter where Circuit City is the only game in town."

The new Best Buy will challenge Circuit City's two-story, 45,000 square-foot store at Pearlridge Center, which opened 5 1/2 years ago.#034;It will definitely be quite a battle," Porter said. "They are very similar. By most accounts Best Buy has been beating Circuit City. A lot of people find Circuit City out of date, not well lit, selection not great."

Molby said the major difference is that Best Buy's sales staff does not work on commission.

Kilo Baird, manager of the Pearlridge Circuit City, said he could not comment on the arrival of a new competitor and referred questions to the company's headquarters in Richmond, Va., where no one was immediately available to answer questions.

The location next to Home Depot could prove mutually beneficial because both Home Depot and Best Buy tend to draw male shoppers, said Porter.

Home Depot has paired up with Best Buy in several Mainland locations and found it works well, the companies said.

Best Buy hired Architects Hawaii Ltd. to draw up plans for the store but has not selected a general contractor, Molby said. The store's design will follow Best Buy's standard 45,000-square-foot plan, Molby said.

Molby said Best Buy, which also owns the Sam Goody music store chain and Suncoast Motion Pictures, selected Hawai'i because the company "is looking to expand where we believe we can be successful."

There are logistic challenges.

"You can't just load a truck and send it on its way," Molby said. But those issues don't seem so daunting to a company that just announced it would open a 45,000-square-foot store in Manhattan this summer.

"If we can open one in New York City, we can certainly open one in Hawai'i," Molby said.

Reach David Butts at dbutts@honoluluadvertiser.com or 535-2453.