Best Buy lauds Johnson magic

In the face of layoffs and declining profits, Best Buy is trying to broaden its customer base in the urban market by opening inner-city store locations and emphasizing specialty products. Now, it's also using Magic.

Best Buy brought its new partner, Earvin (Magic) Johnson, to Bloomington Monday to speak at a kids basketball tournament sponsored by the company. The Richfield-based firm's hope is to expand local growth by piggybacking on the success of Magic Johnson Enterprises, which owns several big-time franchises like Starbucks, Burger King and T.G.I. Friday's in urban locations across the country.

"Being from that community, I understand their needs and wants. No. 1: They want to be listened to," Johnson said in an interview at Jefferson High School. "These are the types of things that I know, that I bring to a great company like Best Buy."

The partnership between the world's largest consumer electronics retailer and the former NBA great began in 2008, and since then, Johnson has been at several Best Buy store openings -- including one last year at the Mall of America. He has spoken at Best Buy-sponsored events across the country. Terms of the partnership were not disclosed.

In part of a broader strategy to reach the urban market, Best Buy has opened new stores in what was formerly uncharted urban territory for the company, including a store in the Bronx in 2008 and one in Compton, Calif., in 2007.

Best Buy has made it clear that it's banking on mobile phones, notebook computers and the newly entered European market to increase overall profit, but CEO Brian Dunn said the urban market is key to local growth.

"This is right there at the core of our local growth strategy," Dunn said Monday after Johnson's speech. "The way you grow a $40 billion business into an $80 billion business is by empowering local leaders to bring all of this amazing technology to the market in a way that makes sense."

But don't expect to see hundreds of new Best Buy stores popping up in urban locations. Best Buy opened about 100 new stores -- most of which were not in urban locations -- nationally in its fiscal year that ended in February.

One of the most vexing problems for Best Buy as it pushes its urban strategy is finding enough space at a reasonable price in the city. The company's big-box stores take up about 45,000 square feet on average, a size that seems better suited for suburbia.

Minneapolis Mayor R.T. Rybak has doggedly tried to lure Best Buy downtown to the City Center building since 2005 but so far has had no success. In the Twin Cities there are no Best Buy stores in urban locations; however, there are several Radio Shacks and Targets -- some of Best Buy's top competitors -- occupying urban real estate in Minneapolis and St. Paul.

"We don't think [Best Buy] is going to open too many more stores," said Brady Lemos, a Best Buy stock analyst for Morningstar. "The market is already pretty saturated."

But there's more to capturing the urban market than just setting up shop in the city. Part of the company's broader strategy is to tailor its products to urban communities in certain stores, said Herschel Herndon, who helped start the Johnson partnership and is Best Buy's vice president of multicultural relations and diversity. In a Chicago store Best Buy has tilted its music selection to appeal to a large Polish population. In an Atlanta store where there is a substantial Korean population, the company has started selling specialized refrigerators that are used to cool a Korean dish called kimchi.

"We've attracted customers from as far away as North Carolina, because they heard Best Buy carries the refrigerator" Herndon said. "It's about how best can we personalize our experiences and become very relevant across a variety of communities."

The company hopes that teaming up with Johnson, whose brand name already has made its mark in the urban market, will give the Best Buy brand a boost its competitors won't be able to match.

The partnership is similar to almost all marketing strategies where a company tries to create brand association between a product and a successful athlete, said Akshay Rao, a marketing professor at the University of Minnesota's Carlson School of Management.

"Don't make the mistake of thinking that Best Buy is a store. It's a brand," Rao said. "The Best Buy brand applies here just as much as it does for Coke and Pepsi."

Magic lived up to his name Monday night, as the five-time NBA champion relived his time as a Laker with about 100 fans in the Jefferson High School auditorium.

"You really want to know how much I practiced?" Johnson asked. "I practiced all day and all night. That basketball was my best friend."

Alex Robinson • 612-673-7405