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Electronics with a Bang... and Olufsen

Bang & Olufsen's design differs from typical consumer electronics retailers such as Circuit City or Best Buy by creating a more inviting environment through the use of materials, colors and the amount of product displayed, says Lawrence Davis, the retailer's vice president of distribution development. At Bang & Olufsen, Davis notes, consumers aren't bombarded by walls of speakers and millions of TV images. Rather, they're introduced to timeless, consumer-friendly, attractive electronics.

Two young engineers, Peter Bang and Svend Olufsen, who met at the School of Arhus in their homeland of Denmark, founded Bang & Olufsen in 1925. One of their earliest innovations was the Eliminator, a first-of-its-kind radio which, unlike previous models, wasn't turned off by a wall switch.

Two years later, the duo moved production from the attic in the Olufsen home to a factory in Struer, Denmark. Today, Bang continues as chairman of the board; Olufsen has since passed away.

Due to the retailer's success and consequent international expansion, Bang & Olufsen is now a $500 million company. Its first store in the U.S. opened in 1991. There are now 40 stores in the U.S. and almost 350 worldwide. Denmark, Germany and England are the largest markets, while the U.S. accounts for 5% of total business. Bang & Olufsen's projected growth for the U.S. includes opening 30 stores a year for the next four years, says Davis, adding that the majority of stores are independently owned and operated under a licensing agreement. Bang & Olufsen is not interested in franchising.

The company's continued success is due to the combination of choice sites and its accessibility to target customers, who are predominantly males (75%); 80% have college degrees, and half of those customers have post-graduate degrees. The majority of these customers are between the ages of 45 and 65 and are in the top 2% of their income bracket.

The company's affluent customers may also be found shopping at neighboring, upscale co-tenants such as Armani Exchange, Rolex, Tiffanys.

Bang & Olufsen believes its high-brow customers are uncomfortable shopping in big-box electronics stores. In contrast, the company strives to create a relaxed environment.

When it comes to design, Bang & Olufsen reasons that less is more. Harmony between technology and design is essential. Earth tones and natural fibers are used so that the products stand out, rather than their surroundings.

Although any electronics retailer could claim to compete with Bang & Olufsen, the company believes it is in a league of its own.

"Nothing about our product is comparable to conventional consumer electronics," Davis says. "Our products have a classic look, attractive designs and are user-friendly."

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