Best Buy is one of several retailers selling Internet of Things (IoT) and connected home devices within stores, but unlike its competitors, the brand has been able to leverage its Geek Squad support service to help give its in-store environment a much-needed shot in the arm. Many industry experts believe Best Buy's service offerings will be a key differentiator as the retailer moves into somewhat uncharted territory.
In a recent earnings call, Best Buy CEO Hubert Joly noted that the company has heavily turned to experimentation mode this year, “testing Geek Squad on-demand services, including same day for customers who need immediate technology help or advice.”
The in-store services may be a part of the reason the electronics retailer surprised analysts with stronger-than-expected Q2 results. Best Buy gained comparable store sales of 0.8% — beating flat expectations — and boosted online sales 24%, showing signs that Amazon isn’t eating its lunch completely after all. In an Editors' Q&A, the Retail TouchPoints team touched on the fact that the Geek Squad’s expertise provided within stores can hit a personal chord that other retailers, particularly the e-Commerce giant, still haven’t been able to achieve yet.
A recent RetailWire article highlighted Best Buy's built-in advantage over competing IoT device providers such as Target and Sears: the brand has already been positioned as an electronics retailer as opposed to a general merchandiser. Since Best Buy has long focused on WiFi, networking and computer-related products, the move to connected home devices is more of a natural fit for their brand.
RetailWire BrainTrust Applauds Best Buy IoT Trial
In a discussion accompanying the RetailWire article, industry executives and analysts debated whether Best Buy should continue to further its push into IoT offerings, and whether they provide the retailer with the differentiation necessary to sustaining success. For the most part, the responses lauded the retailer for taking extra steps that differentiate the brand’s in-store services and customer experience.
The following quotes were posted as part of the RetailWire discussion, titled: Can Best Buy build momentum with new services and IoT?
Chris Petersen, President of Integrated Marketing Solutions, asserted that Best Buy is headed in the right direction due to its continued focus on services: “The money in IoT is in the services, not the products. Best Buy has something that Target, Sears and Walmart don’t have…the Geek Squad! A quick scan of YouTube will reveal all of the frustrated consumers trying to make IoT work in their homes. At this point in time, it is NOT easy! Set up a single device? Maybe. Connected home? NO! So who are you going to call?”
Paula Rosenblum, Managing Partner of RSR Research, expressed a similar belief that the service works as a backbone to the technology: “I think IoT gives Best Buy a great opportunity to shine. The company has set the table with amped-up customer service in stores and sharp prices online. In-home services will be a great differentiator. I think it’s a win.”
Dan Frechtling, SVP Product and Marketing and CMO at payments technology provider G2 Web Services agreed that it was a smart move, especially since the IoT category is still early in its lifecycle: “In particular, price, service and omnichannel offers stand out. Its price-match guarantee applies. As long as the price is from a local retailer (including Costco) or one of seven online retailers (including Amazon.com, though not third party sellers), Best Buy will match IoT prices. Its service is personal and accessible. Best Buy touts stores within 15 minutes for 70% of U.S. shoppers. Geek Squad offers in-store and in-home consultation.”
Challenges Still Abound As IoT Takes Larger Role
Although Best Buy, which recently celebrated its 50th anniversary, has longstanding credibility as an electronics retailer, the company is essentially extending itself into home improvement categories by offering the IoT solutions. James Tenser, Principal at retail content marketing advisory firm VSN Strategies, noted that the retailer will enter uncharted territory: “Connected home devices represent a massive emerging market, and Best Buy is better positioned than any other brick-and-mortar retailer to take a leadership role. But becoming an IoT leader means venturing out from its comfort zone in appliances, networking, computer and video gear to encompass home security, lighting, irrigation systems, HVAC — maybe even power window treatments."
While a majority of the BrainTrust members were bullish on Best Buy’s IoT deployment, Ori Marom, Founder and CEO of pricing consultancy Segmentis, remained skeptical that it would make a long term difference, due to the brand’s pricing model: “Best Buy’s focus on price is a huge handicap when it tries to enter novel product segments. Its low-cost model just doesn’t fit there. Rivals in the nascent IoT sector should focus on service and customer education in order to easily beat them. Best Buy, on the other hand, will predictably continue to focus on price and cost savings.”