Best Buy has seen the future of CE retail and it is tech services.
At the company’s first investor conference since launching its Renew Blue turnaround strategy five years ago, the leadership team on Tuesday detailed its next-phase growth strategy, Best Buy 2020, which leans heavily on in-home and remote-monitoring services.
With the business back on track following a sales and earnings slump under his predecessors, chairman/CEO Hubert Joly and company have since embarked on the new game plan, which builds on recent accomplishments, leverages Geek Squad and outsourced IT expertise, and counts on the chain’s curated assortment to tap into connected-home technologies.
Among the initiatives: An expansion of its Assured Living elder-care pilot, which addresses America’s graying population. The program allows adult children to monitor their aging parents remotely, and is being extended to Denver after launching in the Minneapolis/St. Paul market last July.
Source: Best Buy
Also on tap: Total Tech Support, a new offering from Geek Squad that provides installation and set-up; unlimited phone, online and in-store support; and reduced-fee repair and in-home services for either $199 annually or $20/month. Best Buy is testing both approaches.
The comprehensive program, designed to shore up Geek Squad’s flagging comps, is currently offered in 200 stores in 10 U.S. cities and throughout Canada.
An adjunct effort is In-Home Advisor, which dispatches staffers to customers’ homes to perform free tech consults. The program was launched last year in three cities, and has since been beefed up with 300 advisors and expanded to all major U.S. markets as of earlier this month, Joly said.
The third leg of the services triad is directly tied into smart home. By the end of October, Best Buy’s five-month-old home automation and security program with Vivint will be extended to 450 stores, and the chain is throwing another 1,500 Vivint and Best Buy staffers into the breach to man enhanced smart-home sections in all of its approximately 1,000 big-box locations.
The efforts are designed to shift sales from single units and onsie-twosie attachments to whole-home solutions, while creating subscription-based recurring revenue streams.
Source: Best Buy
That’s not to say Best Buy is turning its back on hardware. The company identified major appliances — where it has a 12 percent market share — and mobile phones — where it commands half that — as significant opportunities, as are ongoing in-store and online enhancements. The latter, reported Shari Ballard, multichannel retail president, include same-day shipping, which will be offered in time for the holiday selling season in 40 markets as the company builds and expands distribution centers.
Source: Best Buy
“We are excited by the opportunities we have in this next chapter to grow the company by helping customers pursue their passions and enrich their lives with the help of technology, which is a much bigger idea and one that is rich with opportunities,” Joly said.
But analysts were less sanguine. The company’s share price fell 8 percent Tuesday after it announced three-year financial targets that were considered either unattainable or disappointing. The goals for 2020: total revenue up 9.1 percent from last year to $43 billion; operating income of $1.9 billion-$2 billion, up from $1.7 billion in 2016; and an additional $600 million in annualized cost savings.