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Future Shop

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Future Shop
Company typeSubsidiary
IndustryRetail
Founded1982
FounderHassan Khosrowshahi
DefunctMarch 28, 2015 (2015-03-28)
FateMerged with Best Buy
HeadquartersBurnaby, British Columbia, Canada
Key people
Ron Wilson - President and Chief Operating Officer

Annalisa King - Senior Vice President and Chief Financial Officer

Charles Tobin - Senior Vice President
ProductsElectronics
RevenueIncrease CAD $5.0 billion (2012)
Increase CAD $3.252 billion (2012)[citation needed]
Total assetsIncrease CAD $10.787 billion (2012)
Total equityIncrease CAD $8.715 billion (2012)
Number of employees
113,100
ParentBest Buy Canada

Future Shop was a Canadian electronics store chain. First established in 1982 by Hassan Khosrowshahi, by 1990, the chain had become the country's largest retailer of computer and consumer electronics. As of January 2013, the company operated 139 locations across Canada.

In November 2001, Future Shop was acquired by the American consumer electronics store chain Best Buy for $580 million. Although Best Buy would begin to establish Canadian locations under its own brand following the purchase, it continued to operate the Future Shop stores as a separate brand, even though many of the new locations were in close proximity to existing Future Shop stores.

On March 28, 2015, Best Buy announced the discontinuation of the Future Shop brand and the permanent closure of 66 of its locations.[1] The remaining stores were consolidated into the Best Buy chain, as the company began the process of converting them to their branding and store format.

History

Beginnings

A Future Shop store in Edmonton in July 2007

Future Shop was founded in 1982 by Iranian entrepreneur Hassan Khosrowshahi, who left Iran to settle in Vancouver, British Columbia to start a retail business.[2] Khosrowshahi graduated from the University of Tehran with a degree in law and economics and was a part of the family who owned the Minoo Industrial Group, a large Iran manufacturer of pharmaceuticals, cosmetics, and food products. Khosrowshahi planned to open a chain of consumer and home electronics stores and take over the Canadian retail market. His associate, Ardeshir Ziabakhsh (Ardy Zia), took the role of president and CEO of the newly formed company and Khosrowshahi served as chairman and founder. In 1983, Future Shop opened the first three stores, all of which were in British Columbia. The company sold computers, software, games, videocassettes, audio equipment, music, and other items. By December 1983, the first month all of the Future Shop stores were opened and making business, the company reached $2.8 million in sales.[2]

By 1990, Future Shop became the largest retailer of computers and consumer electronics in Canada and was operating 38 stores across the country and parts of the United States.[1][2] In August 1993, Future Shop went public on the Toronto Stock Exchange, making $30 million to be used for expansion and to pay off debt.

By the end of 1995, Future Shop's sales had reached more than $1 billion, with more than $38 million EBITDA (earnings before interest, taxes, depreciation and amortization)

In 1997, Future Shop announced a change in management, with Ziabakhsh leaving the company. Khosrowshahi took on the roles of president and CEO, in addition to serving as chairman. Many people from company headquarters were let go during this transitional period.

Focusing on Canadian markets

In 1998, Future Shop purchased the Canadian division of Computer City from CompUSA, three months after the Computer City chain had been merged into CompUSA and either converted to CompUSA or closed and liquidated. During the next year, two of the Computer City retail stores were liquidated because of poor sales. In addition, the competing Adventure Electronics in Ontario and Quebec closed, leaving Future Shop as the only big-box electronics retailer in Canada.

By the end of 1998, the U.S. locations of Future Shop were performing badly, with $53 million in losses over the last few years, and Future Shop projected another $30 million in losses would occur by the end of the next year. After major losses in sales, in March 1999, the company announced that it would close U.S. operations, holding liquidation sales and closing down in the summer.[3] The closures left Future Shop with 81 stores across Canada. Many of the former stores ended up converting to one of its major U.S. competitors, Best Buy.

In 2000, Future Shop owned 83 Future Shop stores and five Computer City stores. In June 2000, Future Shop announced plans to open flagship stores in downtown Vancouver, Toronto, and Montreal.

In February 2001, Future Shop announced that the company would close and liquidate the five remaining Computer City stores because of poor sales. At the same time, Future Shop also attempted to acquire Chapters, a chain of book stores in Canada, but failed to come up with a reasonable offer.[4]

Best Buy buyout, new store concepts

A newer-styled Future Shop in Ottawa in April 2005

In March 2001, the U.S. electronics store chain Best Buy acquired Future Shop for CDN$580 million. Following the purchase, Khosrowshahi stepped down as president, but other executives from Future Shop retained their positions within the company. Best Buy continued to operate Future Shop as a separate division following the purchase, acknowledging the strength of the brand. However, in 2002, the company began to open Best Buy-branded locations in Canada.[5]

The dual-banner strategy sought to improve the company's Canadian market share by providing new options to consumers; the chains were differentiated primarily by their in-store experiences and promotional strategies, as Future Shop continued to use commission-based salespersons and featured home appliance selections, while Best Buy used non-commissioned salespersons and featured more interactive displays. The differences between the stores also attracted differing demographics; Future Shop's use of haggling appealed to customers who had immigrated to Canada from countries where the practice is commonplace, while Best Buy's relatively relaxed atmosphere proved popular among women.[5]

In an effort to widen the brand's customer base, Future Shop began to experiment with an updated store concept at new locations in Vancouver and South Edmonton Common in 2008. The new stores featured an expanded, 53,000 square foot layout divided into sections for different categories of products—including Work (computing), Play (video games, musical instruments), Living (home appliances and exercise equipment), and On the Go (mobile phones and audio products). The stores also featured a central "hub" staffed by "connectivity experts", whom customers could consult for personalized advice on technology options.[5][6] In December 2011, Future Shop opened a liquidation store in Greenfield Park, Quebec.[7]

Although Best Buy's expansion into Canada helped improve the company's overall market share, some of the new Best Buy locations would cannibalize sales at Future Shop stores located in close proximity to them. Some Best Buy locations were located within driving distance, or exactly the same lot, as an existing Future Shop.[5][8]

Downsizing and closure

A closed Future Shop store in May 2015.

On January 31, 2013, Best Buy Canada announced that it would begin to close various locations, including 8 Future Shop locations effective immediately, as part of a "long-term transformational strategy to optimize the company's retail footprint across the country." The company also planned to target more resources toward its online retail operations to compete against other major online retailers such as Amazon.com.[8] These closures included locations in New Westminster, Nanaimo, Victoria, Langford, Surrey, Lachenaie, and Sherbrooke.[1][9][10] On January 30, 2014, 950 employees across both brands were laid off.[9] In 2014 and early 2015, other Future Shop locations were closed, including those in Boucherville, Greenfield Park,[11] Montreal,[12] Ottawa,[13] Regina,[14] Kingston,[15] New Minas,[16] and New Glasgow.[17]

On March 28, 2015, Best Buy Canada announced that Future Shop had immediately ceased operations; 66 locations were permanently closed, and the remaining 65 locations were re-opened on April 4, 2015 under the management of the Best Buy chain.[18] Best Buy argued that these closures and re-brandings were intended to reduce redundancy, as the affected stores were located within close proximity of a Best Buy. The closures resulted in the loss of 1,000 part-time and 500 full-time jobs. In turn, Best Buy announced that it would invest at least $200 million into its remaining Canadian locations over the next two years, including increased staffing and the introduction of home appliance departments across all of its Canadian locations.[8][19] Canadian Best Buy locations will honour Future Shop warranties and gift cards as part of the transition.[19]

The re-branded stores continued to temporarily carry Future Shop branding and signage while in the process of being converted to Best Buy's store format.[18][20]

References

  1. ^ a b c "Future Shop stores closed across Canada, some to become Best Buy". CBC News. March 28, 2015. Retrieved March 28, 2015.
  2. ^ a b c "Future Shop Ltd. Company History". Fundinguniverse.com. Retrieved January 10, 2012.
  3. ^ Harrington, Mark (March 9, 1999). "Future Shop to Close U.S. Stores". Crn.com. Retrieved January 10, 2012.
  4. ^ "Timeline for Chapters". Allbusiness.com. Retrieved January 10, 2012.
  5. ^ a b c d Strauss, Marina (June 20, 2008). "Kevin Layden: Can a dual-brand strategy travel?". The Globe and Mail. Retrieved April 2, 2015.
  6. ^ "Future Shop enters a brave new world". Edmonton Journal. September 19, 2008. Retrieved April 2, 2015.
  7. ^ "Future Shop opens its first-ever Liquidation Centre in Longueuil, QC". Futureshop.ca. December 12, 2011. Retrieved April 25, 2012.
  8. ^ a b c "Future Shop shutters Canadian stores, will re-brand as Best Buy". The Globe and Mail. March 28, 2015. Retrieved March 28, 2015.
  9. ^ a b "Best Buy, Future Shop to layoff 950 employees". Toronto Sun.
  10. ^ "15 Future Shop and Best Buy stores closed across Canada, 900 employees laid off". Vancouver Sun. Retrieved March 28, 2015.
  11. ^ "Future Shop ferme deux magasins". Canoe.ca.
  12. ^ "EXCLUSIF: Un futur Marché Adonis aux Galeries d'Anjou?". Mercier Est.
  13. ^ "Future Shop in Gloucester to close up shop". CTV News Ottawa. Bell Media.
  14. ^ "Regina Future Shop closing Monday". Leader Post.
  15. ^ "Future Shop to close its Kingston store". The Kingston Whig-Standard.
  16. ^ "Future Shop closing two Nova Scotia locations, including New Minas store". kingscountynews.ca.
  17. ^ "New Glasgow Future Shop closing Friday". ngnews.ca.
  18. ^ a b "Future Shop stores re-open under Best Buy name". Toronto Star. Retrieved April 13, 2015.
  19. ^ a b "Best Buy will honour Future Shop cards, warranties". Toronto Star. Retrieved April 2, 2015.
  20. ^ "Shopping At Best Buy (Future Shop?) Is Kind Of Confusing Now". Huffington Post. Retrieved April 13, 2015.
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