Brad Anderson, the 58-year-old chief executive of Best Buy, says the leading US consumer electronics retailer has been “extraordinarily concerned” about the risks of rapid international expansion.

But last week, Mr Anderson announced a $2.2bn investment in a retail joint venture in Europe with the UK’s Carphone Warehouse, with stores in nine different European countries, alongside initial plans for its own-brand larger-format stores in Europe. Best Buy will also open stores this year in Turkey and Mexico, adding to stores in Canada and China.

“We’ve looked at the history here,” says Mr Anderson, who argues that the record of US retailers going to Europe is “arguably worse” than that of Europeans who have expanded to the US.

In an interview with the Financial Times in New York on Monday, Mr Anderson maintained that Best Buy has reduced some of the risks of its latest international expansion by following a strategy it has pursued before in Canada and China – slowly developing its own-brand stores alongside joint ventures or acquisitions run by experienced local management.

“We’re not intending to come in and tell them how to do it; we’re intending to provide resources to help them do it,” he says of the joint venture.

“If you’ve got genuinely independent management teams that function in a highly independent way, we don’t think there’s the same-scale problem as if you are trying to transplant a given specific strategy.”

Timeline

• 1966: Dick Shulze opens The Sound of Music, a hi-fi components store in St Paul, Minnesota.
• 1983: Changes name to Best Buy and embarks on national expansion.
• 1989: Retailer launches supermarket-like “grab and go” format in place of the counter-based system. Staff paid salaries rather than sales commission, creating a less pressured shopping environment.
• 1996:Best Buy overtakes Circuit City to become the largest US consumer electronics retailer.
• 2001: Pays $696m for Musicland, a leading music store chain, in an ultimately unsuccessful deal that led to the loss-making stores being disposed of two years later. Acquires Canada’s Future Shop, a network of more than 90 stores, in its first international acquisition.
• 2002: Brad Anderson succeeds Schulze as CEO. Best Buy acquires Geek Squad, a service and installation company that it eventually expands across its store network.
• 2003: Tests “customer- centricity”, with US stores tailored for specific demographic segments, such as suburban women, small business owners or young males.
• 2006: Enters Chinese market with majority interest in China’s Jiangsu Electronics.
• 2007: Announces investment in and alliance with UK’s Carphone Warehouse, with CPH supporting new Best Buy wireless units in US. First Best Buy branded store opens in Shanghai.
• 2008: $2.2bn investment in retail joint venture with CPH in Europe. Plans first stores in Mexico and Turkey. Best Buy has more than 1,300 stores in the US, Canada and China, including 923 US Best Buy stores. Profit of $1.4bn last year on $40bn sales.

While there is ongoing speculation among investors in Europe that Best Buy might be interested in taking over all of the retail venture, or making further retail acquisitions, both Mr Anderson, and Bob Willett, head of the group’s international division, argue that the retailer needs to continue its cautious strategy.

Mr Willett says that the retailer “knows how to open stores, once we are clear about what we are doing”.

“If you get it right in those first few stores, then you can scale fast. The danger is – and I think this is where others have gone wrong – is to try to scale too quickly.”

For Mr Anderson, the international expansion marks a long journey from 1976, when after deciding not to follow his father into the Lutheran church, he started working at a hi-fi store in Minnesota that eventually became Best Buy. He drove 80 miles to install a set of speakers in the home of his first customer, so desperate was the young Mr Anderson to make the sale.

He has argued that that first sale established a theme that eventually translated into the embrace of customer-centricity (see box) at Best Buy’s large stores, which dot shopping plazas across America. This year the strategy is entering a second phase, expanding the concept to increasingly specific groups of local neighbourhood customers.

“Down the street from here in Manhattan, there are Brazilian customers around our store on 44th. If you go up to Columbus Circle it’s the people living in the building above the store,” he says.

“They’re increasingly getting narrower and narrower segments, and giving more flexibility to respond.”

Mr Anderson says that the theory will be central to the retail venture with Carphone Warehouse – which will include the development of an e-commerce platform that he expects to enable to retailer to sell goods into European countries where the retailers have no physical presence.

“That’s a core underpinning hypothesis of the whole deal with CPW,” he says. The two companies, he says, currently expect this to be under a Best Buy name, but a full branding study will be conducted.

Meanwhile, to reinforce the store localisation strategy in the US, Best Buy is to start working on a national basis in the US with Dunnhumby, the British retail data analysis company, that played a central role in the development of Tesco’s customer-loyalty programme. Dunnhumby, which is already working with Best Buy on planning its first UK stores, with an opening expected in 2009, is also working with the retailer in its other international locations.

Mr Anderson says Best Buy is watching the evolution of digital content delivery that presents a further challenge to stores that previously sold physical CDs and DVDs. It is also continuing to expand its direct sourcing operation in China.

“One of the things we’re trying to do is to get a lot of seeds in the soil,” he says.

Embracing ‘customer-centricity’

Best Buy launched the “customer-centricity” concept in its US stores four years ago, gradually remodelling each of its stores around two or three of its five initial core customer groups – early technology adopters, suburban mothers, small businesses, affluent professionals, and family fathers.

Brad Anderson, chief executive, embraced the concept shortly after succeeding the retailer’s founder Dick Schulze in 2002. A period of reflection on the company’s future direction led to Mr Anderson meeting Larry Selden, a professor at Columbia University’s business school. Mr Selden argued that companies needed to avoid trying to keep all of their customers happy all of the time, but to concentrate instead on their best customers – a theory set out in the 2003 book Angel Customers and Demon Customers, co-written with Geoff Colvin.

Customer-centricity, says Mr Anderson, means ”listening to understand how customers are going to deploy the stuff they buy from us, and use it to enrich their lives, and trying to get in front of that ... rather than worrying about selling the product”.

At Best Buy, the programme has involved investing in new store design – including help desks for small businesses, or gaming stations where customers could try out the latest computer games. It also involved additional training for staff.