Last year, Best Buy came to the U.K., opening stores and a website, bestbuy.co.uk. The retailer, a household name in the U.S., hoped to make a big splash by introducing some competition across the pond.

Yet despite a promising start, the venture has likely lost over £100m to date and Best Buy's U.K. partner, Carphone Warehouse Group (CWG), is conducting a "strategy review" of the venture's operation.

This morning, the US retailer announced that it would be closing all eleven U.K. Best Buy stores.

So what happened?

For starters, Best Buy's entry into the U.K. was delayed during the financial crisis. Although it's not clear that the venture would have fared any better if Best Buy had opened stores earlier, there can be no doubt that entering the market at such a late date (and during still-difficult financial times) didn't pose challenges.

Then there's the strategy. As with Best Buy in the U.S., the Best Buy U.K. strategy called for stores in high-profile locations. To lure customers in, Best Buy U.K. focused on price.

As The Verge's Vlad Savov notes, the "initial surge of demand was fueled at least in part by rock-bottom pricing intended to entice customers through the door." But undercutting the competition wasn't sustainable, and many shoppers apparently decided to go back to the competition once Best Buy's pricing wasn't a factor.

For the consumers who did welcome Best Buy to the U.K., the retailer's exit from the market isn't likely to be a full one. The bestbuy.co.uk website may be kept alive, and it's likely that Best Buy 'mini-stores' will be brought into Carphone Warehouse stores.

In retrospect, 'mini-stores' may have been a more prudent way for Best Buy to enter the market in the first place.

Already under pressure in its home market, Best Buy provides yet another case study for just how difficult it can be to enter new retail markets, even when you have a strong local partner at your side.

Patricio Robles

Published 7 November, 2011 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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