Bang & Olufsen America's Retail Bet Appears to have Paid Off

We reported last year about the new direction that Bang & Olufsen America has taken in distributing its products: the company has recently opened a series of branded BOA stores around the US. The strategy seems to have paid off. The company reports increased sales of more than 60% in the first quarter of its current fiscal year, and claims that individual shops reported an average sales increase of 20%.

BOA says it plans to open more than 185 shops in the US, Canada, and Mexico in the next three years, having recently celebrated the opening of its 40th store, in Dallas, Texas. The company states that it currently owns and operates six of these shops, with the balance owned by joint partnerships between BOA and retail partners or independent retail partners. BOA plans to add 10 more shops in time for the 2000–2001 holiday season.

To meet this end, BOA has entered a 16-store joint retail venture with Mark2. BOA's Ole Bek says that "Mark2 principals Marc Chelnik and Mark Russell have developed four successful B&O shops. Their Madison Avenue shop is BOA's top-volume US location and B&O's second-largest volume worldwide. By partnering them in future development, we combine Mark2's development and management expertise with BOA's financial support for faster expansion. Joint development with other successful B&O retail partners will play a major role in our retail development strategy."

Mark2's current stores are in Manhattan, Atlanta, King-of-Prussia (Pennsylvania), and Roosevelt Field (Long Island). The new joint partnership is intended to take over BOA-operated shops in Short Hills, New Jersey and Tyson's Corner, Virginia. The joint venture is also planning to develop and open 10 additional shops by 2002, with a new shop currently under development in Providence, Rhode Island. BOA says that additional sites are planned for New York, Philadelphia, Baltimore, and Atlanta.

As a result of the rapid growth in retail outlets, BOA is itself experiencing some growth; a "massive management reorganization" is in the works. Along with realigning and expanding its management team, BOA says it also plans to double its headquarters staff to accommodate the company's growing distribution network. According to Ole Bek, BOA is adding 30,000 sq. ft. of office space in Arlington Heights, Illinois, including a "live" B&O store for training, sales, and market research.