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Will Best Buy Get the Last Laugh on Apple?

By Rick Munarriz - Apr 4, 2013 at 7:00PM

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Best Buy is adding Samsung stores, but it better make sure that the "store in a store" concept isn't too successful.

Outside of Samsung itself, the biggest winner in the upcoming release of the revolutionary Galaxy S4 in the coming weeks may be Best Buy (BBY 2.36%).

The struggling consumer-electronics chain will be housing Samsung Experience Shops inside its superstores, giving the South Korean consumer electronics giant a way to show off its latest phones, tablets, and laptops

AllThingsD's Ina Fried checked out one of the six test stores.

This isn't merely display space at a prominent location within the store. The 450-square feet "store within a store" is staffed by a dedicated Samsung consultant to oversee the operations.

As Samsung gets cooler -- and Apple (AAPL 4.08%) sheds some of its swagger -- Best Buy has positioned itself as a beneficiary.

BB&T Capital Markets analyst Anthony Chukumba made the argument in January, raising his rating and price target on Best Buy on the theory that folks will flock back to the superstore chain now that there's less reason to hit up a dedicated Apple store.

It makes sense in theory, especially now that Samsung has another hit on its hands. You obviously can't buy an S4 at Apple, and the coolness equation is pretty simple. Apple is way cooler than Best Buy, but Best Buy is also way cooler than the stand-alone wireless carrier stores.

The challenge, naturally, is if consumers still crave the in-store experience. Wireless carriers make it all too easy to order online and have smartphones shipped at the same in-store prices. However, waiting for the FedEx truck isn't always an option for impatient owners after a smartphone gets smashed to bits. There are also plenty of early adopters who enjoy the release date ritual of lining up with other early adopters.

It will be interesting to see how this plays out. Will Samsung promote these locations? Will they remain popular after the initial S4 buzz passes? Will customers balk after realizing that the S4 costs $50 more than the iPhone 5?

More importantly, will this be too successful? Apple and Mr. Softy have been able to open their stand-alone stores because of brand recognition; but isn't it a matter of time before Samsung follows suit? If enough shoppers are flocking to Best Buy for the sake of the Samsung mini-store, it won't be long before Samsung begins hitting up mall landlords to find selling space.

If Samsung times it just right, it can wait until J.C. Penney cans Ron Johnson, the guy who helped Apple introduce its still popular chain before flopping badly in his makeover at the department store chain.

This is about to get interesting.

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Stocks Mentioned

Apple Inc. Stock Quote
Apple Inc.
$149.64 (4.08%) $5.86
Best Buy Co., Inc. Stock Quote
Best Buy Co., Inc.
$83.99 (2.36%) $1.94

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