It might have a tacky name and a garish corporate colour scheme that makes it look like Ikea in reverse. But Best Buy's entrance into Britain poses a serious threat to the country's existing electronics retailers, not to mention new kids on the block like Tesco.
The US retailer – nicknamed "the big blue box" in its homeland – is using Carphone Warehouse as its Trojan Horse into Europe, paying £1.1bn for a 50 per cent stake in the latter's retail operations.
From Carphone's perspective the deal's attractions are obvious. While some will be disappointed with the creation of the joint venture (rumours had been circulating of a full-scale takeover of the group, or at least a sale of the division to Best Buy), the cash raised will enable the group to deal with a debt pile that had risen to disturbing levels (£800m at the most recent calculation).
It will also provide Carphone Warehouse with ample firepower for the funding of a possible takeover of Tiscali's UK business and provide the capital, know-how, and crucially, the buying power needed to expand into the fiercely competitive consumer electronics market.
For Best Buy the attractions are, on the face of it, less obvious. The deal values Carphone's retail business at £2.2bn. That represents seven times 2008-09 forecast earnings and is above most analysts' reckoning of what the business is worth. What is more, Best Buy is splashing the cash at a time when conditions on the high streets – and out-of-town retail parks – of Britain and Europe are hardly happy.
In Carphone's home market inflation is rampant, driven by soaring food and fuel prices, and the credit crunch has brought the debt-driven consumer boom to a halt. The economic sentiment is rotten and purse strings are being tightened across the board as feeding the family and fuelling the car take priority over hi-tech toys, however whizzy.
But Charles Dunstone, Carphone's founder, has an answer for this. "It presents us with an opportunity," he said. "Our large format stores will be Best Buy. We want to bring the brand over here and get the yellow tag well known in Europe. The slowdown means we can get space in the market place at competitive prices."
This space is expected to be in out-of-town locations where larger stores can more easily be built. Both companies are coy over exactly how big those stores will be – although Best Buy said that the "availability of real estate" would be the limiting factor.
However, the US outlets are both larger and more ambitious than anything currently found in the UK, selling a huge range that includes everything from flat-screen televisions and computers to washing machines and fridges. In its presentation Best Buy said it aimed to "own its customers' home". It is one of those catchy phrases that probably sounds great in the boardroom and rather scary to the outside world.
But essentially it means that Best Buy wants to provide every gizmo you might want, while "enhancing the electronics experience" by helping you use them with the aid of its "Geek Squad" team of engineers and electronics experts. And if it can get the service aspect right they have a real opportunity. Service at the existing players is not always good – all too often staff appear to have little knowledge of the products they sell. Those that do can come across as supercilious, even patronising.
Best Buy claims to be different. Its chief executive Brad Anderson said: "I started off as a clerk; a spectacularly bad one. But when I finally made my first sale I took a 20-mile trip to deliver and install the speakers I'd sold. I learned about the importance of service from that."
The company started off as Sound of Music, an audio speciality store in Minnesota, in 1966. Four years later it had breached the $1m turnover barrier after becoming a public company the year before.
The most profitable store in 1981 was destroyed by a tornado, but the company shrugged it off, and now its "tornado sale" has become an annual event. While Best Buy, the name it adopted in 1983, has not been without problems during its rapid expansion, it is now the world's biggest electronics retailer with nine brands, 150,000 employees, 1,300 stores in the US, Canada and China and a 21 per cent market share in the US alone.
Europe has long been in its sights and Carphone's share price has been on the rise ever since Best Buy first took a 3 per cent stake in the company last year. So why not just take over the whole thing?
"We thought about it," admitted Mr Anderson. "It was an option but Carphone Warehouse is an unusual company in the way it is put together. If we did a full merger it would be harder to explain to our shareholders because there is just no equivalent in the US. What we are saying is we want to work with the Carphone people together on this."
And so it's a truly 50-50 deal, with a joint shareholder board of three people from each side to which management will report.
Intriguingly, the chief executive of the JV will be not Mr Dunstone (he will sit on the shareholder board) but his long-time finance director Roger Taylor. He and his team will, of course, be in the words of Mr Dunstone "augmented with people from Best Buy".
The structure would, however, leave Mr Dunstone free to concentrate on Carphone's telecommunications and broadband business that now appears to have more attraction to him than the stores that made his fortune.
So will this lead to a full-scale takeover down the line? Mr Anderson insisted "it could go either way". But don't bank on it. US companies have traditionally been willing to pay up if that is what is required to get them into new markets and take their businesses global. This deal looks very much like one of these. Best Buy's competitors had best raise their game. It looks like the new kid on this block is planning for a long stay.
Dunstone talks down 'knock-out' bid for Tiscali
Carphone Warehouse founder Charles Dunstone was yesterday desperately playing down prospects of a knock-out bid for Tiscali's UK broadband business.
The £1.1 bn deal with Best Buy has turned a debt mountain of £800m into a cash pile of more than £250m.
Carphone is one of eight bidders for Tiscali, with its initial bid for the UK business competing with BSkyB, BT, Virgin and Vodafone.
But Mr Dunstone made a point of insisting that he would not overpay.
"We will use the funds to pay down debt and invest in new growth opportunities," he said. "But I don't think Tiscali is worth any more today than it was yesterday."
But if the rumours in the City have any truth the issue is not what is on Carphone's radar but what radar it is on. Vodafone was again touted as a bidder for Carphone's broadband and fixed line business, with talk of an announcement as soon as next week. Mr Dunstone holds a third of the shares and would probably want a pretty price.