Are Geeks Out of Place in Target’s CE Departments?

Discussion
Mar 07, 2013
George Anderson

Target’s deal with RadioShack didn’t work out, but early indications are that its test with members of Best Buy’s Geek Squad started last year in Denver is working out well enough for both companies to extend the trial to the Kansas City market.

On Target’s fourth quarter earnings call, company chairman, chief executive and president Gregg Steinhafel said the retailer had received "positive feedback from our guests" in Denver and rolled out the service to 20 stores in Kansas City beginning on Feb.17. If the next phase goes well, it is assumed, Target and Best Buy will further expand the service.

In a RetailWire poll in August of last year, 67 percent of respondents said Geek Squads were more of a benefit to Target than Best Buy. Only 16 percent thought Best Buy was getting the better of the deal and 10 percent thought both parties would benefit equally.

While Best Buy has struggled in recent years, the consumer electronics chain posted better than expected results for the fourth quarter with comp store sales up roughly one percent. Online sales were up 11 percent during the period. Best Buy president and CEO Hubert Joly did not mention the Target test during the company’s earnings call.

How likely is the Geek Squad experiment in Target to go chain-wide? Is this pairing of technological competency and retail selling environment something that could work for other parties?

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16 Comments on "Are Geeks Out of Place in Target’s CE Departments?"


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Robert DiPietro
Guest
7 years 6 months ago

I don’t think the experiment will go chain wide. I think Target is learning what it takes to sell technology then will do it themselves.

Geeksquad has been in Office Depot, Fedex Kinkos, and now Target.

It may work for the host retailer, but I think it is a losing proposition for Best Buy/Geeksquad. If that is a core competency and a reason for customers to shop your store, why are you giving it to other retailers?

Dick Seesel
Guest
7 years 6 months ago

I can easily see this partnership being expanded to other stores. It provides a level of service and tech credibility for Target that will help it become more competitive with Walmart in the CE space. And it takes a key asset of Best Buy to a well-trafficked discounter when its own big-box stores are undershopped.

To take the idea one giant step further, why not “Best Buy at Target” as an umbrella for the CE department?

Bill Emerson
Guest
Bill Emerson
7 years 6 months ago

Value-added services like the Geek Squad is one of the few areas in the CE world that gives the 4-waller a rare competitive edge over the online world. Expect this to expand. Given the growing complexity and reach of these devices, adding services to help the end user understand how to get the most out of them (a la Genius Bar) is a no-brainer.

Ed Rosenbaum
Guest
7 years 6 months ago

This still seems to be a win for Target as they learn what it takes to add this level of technology to their services. I see this as a stepping stone for Best Buy as they look for that next opportunity to outsource their services. Overall, however, this still appears to be a dead end street for both companies.

Kevin Graff
Guest
7 years 6 months ago

While I don’t know if this will ever go chain-wide, this seems to be a good idea of ‘partnering’ for both retailers. Target differentiates itself yet again from the other discounters. Best Buy gets their brand noticed by an ever wider audience.

Who loses? I’d say no one. Starbucks operates inside Target and both win. McDonald’s operates inside Walmart and they both win. All in all, this is solid business move (in my humble, and sometimes wrong, opinion).

Mark Price
Guest
Mark Price
7 years 6 months ago

If executed cleanly, this program should be valuable to Target. The company is not in the core business of selling and installing electronics; as a result, the ability to “outsource” such capabilities and present them within the company appears to be a good fit.

Many companies fail by trying to acquire expertise outside of their own core competence. If they are smart and outsource that need, they can provide an expanded service capability to customers and build their brand without losing focus.

Tom Redd
Guest
7 years 6 months ago

Oh come on! 2 companies from the “casserole”/”hot dish” State of Minner-sota have to be able to make this happen. Important element—make sure that the Geeks are wearing the latest Target “hip” fashions and sell the new new seasonal fashions via the Geeks. Fashion and Tech are a new frontier, especially with the demand for statisticians and math experts.

From WSJ – March 1 – “In a still-soft jobs market, rising demand for statisticians also has spurred interest in the field. There were 28,305 postings for jobs in statistics, analytics and, in the trendy phrase, “big data” at the jobs website icrunchdata last month, up from 16,500 three years earlier, according to Todd Nevins, a site co-founder.”

This drive for the true geek will continue – high school kids are seeing it first hand. As the market redefines geek into new, hip person Target can leverage this moment in the market and redefine the old Best Buy geek, create a new style geek, and add value to the store floor.

Tom…hip retail geek.

Nikki Baird
Guest
Nikki Baird
7 years 6 months ago

So I live in Denver, and I’ve seen the signs up in the stores. But I confess, I have yet to encounter a Geek Squad Geek in my Target travels. I have been scratching my head about the partnership for precisely the reason George mentions—that I can kind of see what’s in it for Target, but I have a heck of a time seeing what’s in it for Best Buy. The only thing that I can come up with is that Geek Squad may be run somewhat independently (it is a services business, rather than straight retail, and from what I know of the group, they have a very strong culture that is not really a Best Buy culture). Maybe someone in that division figured out this was a good way to create leverage that enables Geek Squad to stay strong, even if it doesn’t necessarily accrue benefit to Best Buy stores. That’s about the best that I can come up with….

Lee Peterson
Guest
7 years 6 months ago

I think it’s highly likely that it’ll work. It’s also worth thinking about how else the Geeks may be used while they’re at it. Could they help with ‘same day’ delivery? Could they install a sink? (Do Geeks do plumbing? Not sure.) Could they bring some groceries with while they’re installing something? On an on.

The idea of having a mobile force to help bring both brands to the customer is very intriguing!

Mel Kleiman
Guest
7 years 6 months ago

This will work out well for both parties. Consumers are in need of a place they trust to get computers repaired. Target has a trusted name and a clientele that is less likely to be tech smart than Best Buy. They will also have more confidence in the Target brand than RadioShack.

Gordon Arnold
Guest
7 years 6 months ago
The issue here is one of the oldest in the computer industry: how to create a brand-recognized, value-added sale in the Information Technology industry. The problem is made more difficult due to powerful retailers selling at cutthroat prices and a consumer market plagued with “I can figure this out myself” syndrome. Hundreds of companies have looked at product and dollar volumes and been lured in just like we see here with TARGET. Once they get in and feel the sting of customer complaints and expensive returns combined with rooms full of obsolete inventory the thrill is gone along with many careers and companies. Even though this blood trail is wide and long, retailers are still impressed by the numbers and confident in there own abilities to beat the odds. A practical view of combining the talents of a company with little or no IT sales experience with a company struggling to survive in the IT business makes your head shake side to side involuntarily with a chagrined facial expression. Sharp investors will look at the… Read more »
Mark Heckman
Guest
7 years 6 months ago
First, it should be noted that if I am in the market for consumer electronics, Target does not make the list of top-of-mind options. Like many non-apparel categories at Target, CE is under sku’d, inconsistently stocked, and their sales associates are usually uniformed in the area of technical expertise. With that glowing endorsement aside, anything Target does in this area to bolster its delivery should show benefit. Moreover, if the addition of the Geek Squad also means more overall attention to the CE department at Target in terms variety, and better management of out-of-stocks, Target wins again. On the Best Buy side of things, they, like other CE retailers, are reeling from the lost sales and margins from their largest single sales category, Flat Screen TVs. This important category is so price competitive and now so saturated in consumer homes, sales and profits are radically in decline. Consequently CE retailers have to be looking for new customer touch points and income streams. The relationship with Target fits that bill rather well. However, Best Buy would… Read more »
W. Frank Dell II
Guest
7 years 6 months ago

Best Buy has done a good job with the Geek Squad. They identified a need, created a service and marketed well. I have used the Geek Squad and was pleased with the results.

Both Best Buy and Target have similar images. I trust both are making some money from placing the Geek Squad in Target stores. I would expect them to expand the service over time, even to the point of placing Geek Squad units when each has stores near each other. Geek Squad has its image and target customers. It could stand on its own, like PC Warehouse, but likely does better off normal store traffic.

When a retailer creates something exceptional, they don’t always maximize sales by keeping it to themselves. Safeway created a very successful pre-paid card product. It is now located in supermarkets outside of Safeway’s market. The answer is, yes you can sell something in your competitors’ stores.

Carol Spieckerman
Guest
7 years 6 months ago

The Geek Squad/Target hook up was announced and underway prior to Best Buy’s current CEO taking the helm. I’ve wondered if Mr. Joly would have included it in his go-forward plans given the choice.

I have no doubt that retailers will continue to integrate services and solutions into their environments and continue to make their brands (even if those brands are services) available to competitors. However, given all of the plates that Best Buy has in the air and Target’s middling consumer electronics position, I see this one quietly going away.

Lee Kent
Guest
7 years 6 months ago

I think the extension of Geek Squad beyond Best Buy is a good move for Best Buy on many levels. I look at Geek Squad as an additional brand/service that Best Buy offers and while not getting folks into the best Buy store (a whole other problem to me) it is keeping the brand in from of the consumer. As long as the service is good, the brand stays strong.

Now how does Best Buy leverage this back to the store? Maybe they think about levels of service, additional services, demos, events?

Kai Clarke
Guest
7 years 6 months ago

Yes, yes, yes. The Geek Squad is a great fit for Target and any other retailer who does not sell service. Since BB has already made the investment, they are able to simply add the Target customer base to their Geek Squad calls and this delivers a win/win to their efficiency combined with a win to their bottom line.

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