Filling Its Boxes With Boutiques
Question: If you are Best Buy, how do you follow up what might have been the retailer’s best week ever (see TWICE, Sept. 7)?
Answer: By cutting separate sales-floor real estate deals with the country’s two-largest mobile carriers and the world’s largest department store chain.
Fresh on the heels of its turnaround trifecta earlier this month when it pleasantly surprised Wall Street, deepened its Apple bromance, and tied Amazon on price, the retailer announced a new series of stores-within-a-store, both inside and outside the box.
On the carrier front, AT&T and Verizon have become the chain’s latest tenants with the rollout of 250 branded in-store shops each to select Best Buy showrooms.
Verizon expects to have nearly 100 of its new “Experience Stores” up and running by the end of this month, to serve as an adjunct to its current presence within Best Buy mobile departments. The shops will range from 90 to 180 square feet, Verizon told TWICE, and will showcase the latest smartphones, tablets, computers, wearables, accessories and data plans.
The sections will be staffed by specially-trained Best Buy employees, and their sales-floor locations will vary with each store’s big-box footprint, a spokesperson said.
“The Verizon Experience in Best Buy is geared to showcase connected lifestyles such as wearable tech, computing on the go and connected home, and the devices and plans that make these lifestyles a reality,” said John Colaiuti, the carrier’s national distribution VP.
“Just like in our own ‘Destination’ and ‘Smart’ stores, the specialists in the Verizon Experience stores at Best Buy are trained in a hands-on environment so they can provide real-world examples to customers when talking about our new simplified plans and devices,” he said.
The AT&T shops will similarly be manned by dedicated Best Buy staffers. But in addition to mobile products, wearables and connected-car plug-ins, the sections will also carry the carrier’s Digital Life home automation and security platform, and will eventually showcase DirecTV services from its newly acquired satellite provider.
“By expanding our in-store presence and depth of products sold at Best Buy, we’re giving customers another convenient way to fully experience what AT&T has to offer,” said Andy Shibley, national retail senior VP at AT&T Mobility.
From Best Buy’s perspective, the shops “allow us to offer even better service to our customers, whether they need help with their data plan or understanding how their phone or tablet can better control their increasingly connected life,” explained Josh Will, the chain’s senior category officer of mobile and connected home. “The mobile device is becoming the remote control to everything else in our lives, but it can be confusing. We can help shoppers make sense of it all.”
The Experience Stores join an already crowded field for Verizon, which numbers some 7,124 company-operated and authorized retailer locations across the U.S., according to AggData.
AT&T is no slouch either, with some 5,341 company-owned and authorized retail locations under its belt.
The carrier shops join an equally crowded sales floor at Best Buy, which recently added Samsung appliances and Sony high-res audio demo areas to its roster of branded vendor shops. Other dedicated sections feature Apple computers and smart watches; Samsung mobile products; Microsoft-fueled PCs; and Ultra HD TVs by Samsung, LG and Sony.
The in-store shops are a key initiative under CEO Hubert Joly’s Renew Blue turnaround strategy and are credited with helping to restore the chain’s traffic and comp sales.
“I am very excited about these how these partnerships with our key vendors have evolved,” Hubert said last month on second-quarter earnings call. “It’s more than just about the physical layout in the stores. These are very close partnerships.”
Joly turned the strategy on its ear with his new partnership with Macy’s, which begins this fall with a test of 10 branded Best Buy boutiques inside the famed department stores.
The licensed shops will be about 300 square feet in size and staffed by Best Buy employees. Set to open in early November, the stores-within-a-store will carry a select assortment of Samsung smartphones, tablets and smart watches, plus headphones, Bluetooth speakers and accessories, including cases and chargers, from Samsung and other manufacturers.
For Macy’s, the move represents an in-store return to the CE category following a series of pilots and false starts. For Best Buy, it provides an opportunity to target a higher-income customer while extending its brand beyond its own big-boxes, as it has with its ubiquitous airport vending machines.
“We are delighted that consumer electronics will be returning to selected Macy’s stores through this test, which will allow us to learn how we can best serve our customers’ needs in this very sophisticated category,” said Macy’s president Jeff Gennette. “Our customers have expressed interest in electronics for self-purchase and gift-giving, and this collaboration with Best Buy reinforces Macy’s as a shopping destination throughout the year for the products that are most in demand.”
Macy’s, once a major proponent of CE along with the rest of the department store channel, largely abandoned the category as discount chains wrung margin from the business.
It has since kept a hand in the category via online sales and in-store demos; a J&R Music World outpost in the basement of its flagship Herald Square store; and, like Best Buy, even trials of CE vending machines.
Gennette said the new partners “will test and learn … through the holidays and into 2016 before deciding on next steps.”