Best Buy Bets Future on Connected Store
Best Buy is going smaller and more "Connected" and this new future for the consumer electronics chain is on display inside a new format store in Richfield, MN.
According to a report from the Star Tribune of Minneapolis, the new Connected Store unit and its brethren will range from 30,000 to 45,000 square feet compared to the 58,000 of a typical Best Buy. The new stores will include a Geek Squad Solution Central area where customers can get tech support and take classes.
"Technology is an amazing place to be right now for Best Buy," Josh Will, a Best Buy vice president in charge of the Connected Store, told the Star Tribune. "But it’s still too hard for consumers to use. It’s difficult to get a good understanding of what technology can do for you and more importantly how it can better your life. It’s time that our shopping environment matches that expectation."
The Connected Store will also feature Magnolia Design Centers that will come with models of a living room, patio and home movie theaters where shoppers can see and operate the latest technology using an iPad.
Back in March, when Best Buy first began providing details of the Connected Store, Doug Stephens, president, Retail Prophet, observed in a RetailWire discussion, "I think there’s a huge opportunity for Best Buy to deliver education and training to its customers across a multitude of categories and perhaps even develop a new revenue channel in doing so. There’s really nothing here though that strikes me as game-changing. It sounds like they’re planning to do a little of what others are already doing. Today, being a little of a lot of things can be perilous. They haven’t answered the all important question: ‘What will I go to Best Buy for that I can’t get anywhere else?’"
Best Buy has been testing the concept in the San Antonio and Twin Cities. The company is not only looking for Connected Stores to satisfy the needs of current Best Buy shoppers, but also attract new ones to the chain.
Discussion Questions
Discussion Questions: Will the Connected Store come to the rescue of Best Buy? Will the new format help to address the showrooming challenge that Best Buy faces?
Best Buy’s latest strategy seems to be to imitate Apple. It makes sense. Use education and tech help to lure customers into the store. It builds trust and generates sales, while not driving staffing costs too high.
I voted product and service pricing as the biggest obstacle.
I’m amazed at the number of retailers in the 21st century that still believe they can “hand-hold” customers throughout the sales cycle. Customers have access to the web to do research, price comparison, independent reviews, videos about any given product, but yet we still have retailers who think they can use the same selling techniques of the 20th century.
Answer: NO and NO. Of course, I can’t predict the future or I’d bet on the Superbowl, but as indicated, it sounds like a management team with no real insight or breakthrough, is back-slapping themselves and feeling proud that they’ve invented something. These are clearly moves in the right direction, but moving in the right direction falls far short. I’m not sure what The Connected Store really is, but I doubt it comes close to my vision of what that term means for shoppers.
Doug Stephens’ analysis is spot on “There’s really nothing here though that strikes me as game-changing … being a little of a lot of things can be perilous.” Not being on the inside, not being a financial analyst, my gut still tells me that it’s make or break time for the company and they have to go big, push the limits, and do something truly game changing, or their fate is written. Additionally, I would have selected “all of the above” if it were an option in the instant poll.
Best Buy’s challenge continues to be getting people to pay for the service they offer. It’s too easy for shoppers to get smart with Best Buy’s resources and then purchase products from elsewhere. I think the strategy goes back to the core of what Best Buy can provide but they need to figure out how to get financial value for what they provide. Geek Squad is certainly the core, but can they also provide unique products, exclusive SKUs, in store events?
Doug is still right: Best Buy lacks a differentiated product mix and even the line in this article that says shoppers can “operate the latest technology using an iPad” hints at where their greatest competition is likely to come from. What can Best Buy bring that shoppers will pay for that is unique? Service can be a key differentiator, but they still need to answer the question of “why do I buy from a Best Buy store?”
I think we are all thinking about how Best Buy will even come close to the experience at an Apple Store when reading this discussion and question. If Best Buy is going to truly stake its claim in this area, they had better do it right the first time and get it done quickly or they will be outdone by other retailers. If they do, they will have an opportunity to be the go-to retailer when setting up a home theater system and other configurations that have most of us perplexed as to where to start and how to get it all connected. I think most people would certainly welcome a few other retailers that can help us out without the attitude that sometimes comes from the “Genius” bar.
The Geek Squad Solution Central is a very solid concept if Best Buy management takes every possible step to make certain that it’s well run, nicely executed, and makes customers happier, not sad, about Best Buy. The general public is starving for an easy way to get their tech products serviced and fixed, quickly and hassle free. If thought through properly and with an ounce of vision, this can lead to a lot of new customer sales all throughout the store.
Service may be the real (only?) point of difference in bricks-and-mortar stores. That has been a weak spot for Best Buy. The question is, can they deliver? What does the associates training program look like? That will answer the question of whether it will succeed (not so much the connectivity of a mock living room)….
The new, smaller format is a good start. Now Best Buy needs to figure out the best way to optimize revenue per square foot in the new smaller space. Some ideas:
1)Create a small 10 – 20 person educational center where Geek Squad members could teach classes ranging from how to use smart phone apps to programming your universal remotes. Apple has mastered this approach and customers that come in to learn tend to leave with either a new purchase or a story to share with friends on how great Apple stores are.
2)Become a solutions provider not just a store that sells big screen TVs. The Magnolia concept should help. The sales team needs to share an entertainment vision with customers.
3)Over-the-top employee training (Disney over-the-top training). Customers are more likely to support a local store if they know that when they arrive they will have an unparalleled experience.
4)Surprise and delight. Complementary coffee or maybe a small play center for children that is staffed at all times so parents can shop while their child is having fun.
Best Buy has a tremendous opportunity to rebuild their brand, customer base and sales. Their approach over the next 24 months is going to be critical to their long-term success.
I still like their “Escape” format from a few years back better. TV chairs; individual gaming centers for rent by the hour; big screen HD video systems with “viewing pods” for the big events on TV; and beer. Yep, gaming/sporting heaven with a bar right there. Oh, and every video/audio/gaming gadget you could imagine displayed randomly throughout the space. Now that was guy-geek heaven.
The Connected Store is the right move for BB. Will it rescue BB? That depends on the execution.
Will the new format help address the showrooming challenge? Every retailer should be using this type of format (as fits their category) to move to a showrooming format.
All retailers should embrace showrooming, with the caveat that they can provide whatever is showing and more. With the caveat that they can meet their shoppers’ needs. With the understanding that the shopper doesn’t have to walk out of the store with their products, only buy their products (and have them delivered home). The retailer embracing showrooming tactics will be operating an unbeatable business model.
Making tech products and solutions more accessible is really important. Tech purchases are no longer the occasional big trip to an out-of-town store.
However, there is a lot more to the proposition than smaller format stores and good advice. Per some of the comments, the whole Apple brand is high on appeal right now which enables the stores to act as brand amplifiers.
Best Buy does need to change its stores, but it also — and maybe first — needs to find its mojo.
Having walked through the Connected Store in Richfield, MN, the experience left me unmoved. Ironically, there wasn’t anything that recognized and/or invited me as a ‘connected shopper’. The store design is certainly suggests that customer education is available, but will customers accept this as a valued destination that will alleviate ‘showrooming’? Unlikely. In fact, given some of the recent statistics the new format may actually increase ‘showrooming’.
The success of this new format will come down to the caliber and commitment of the ‘Blue Shirts’ (sales associates) working and interfacing with the customers. I’ll be making more visits to this store over the weeks to come to observe how this format resonates and develops.
I think the smaller footprint makes a lot of sense, and I think the new service offerings can drive incremental traffic. Best Buy competes in an extremely competitive and low margin space, and they just need to continue to evolve their stores and offerings to survive.
This sounds like a great idea. Follow the Apple model. Give the consumer a great experience in the purchasing process. Then back that up with a large backbone of distribution.
It sounds like the Connected Store is a strategy for being more flexible and offering more of what people want. Sounds right to me.
One more thing — I think this forum needs to move off the occasional defensive attitude about showrooming and offer more comments on how retailers can stay more in touch with consumer behaviors, which include showrooming now and who knows what next.
“Rescue” may be an overstatement, but the “connected store” is a step in the right direction for Best Buy. It’s a natural evolution of the omni-channel concept, where a smaller footprint meets the “endless aisle” and a re-conception of wrap around services.
As a house of brands, Best Buy can never be an Apple Store, with its narrow and captive product line. Here again we find both a challenge and an opportunity. Lots of consumers prefer non-Apple solutions but they are frustrated by the challenge of getting their devices to work together seamlessly. (Try syncing your Android smartphone address book to MS Outlook on a Dell PC if you don’t know what I mean.) Helping customers master these usability issues is a huge service opportunity for Best Buy that Apple cannot address.
One more word on the “scourge of showrooming:” Ugh! I’m so tired of lazy analyses of this issue all over the media. Smart phones can be both vehicles for shopper diversion and tools for their conversion. It’s up to the retailer to invent ways to discourage the former and encourage the latter. If you can’t stand that kind of heat, get out of the kitchen appliance business. Or the TV business. Or any other high-consideration product business, for that matter.
No it won’t! Best Buy seems to be out of ideas! Without new ideas, they will surely perish. I think they have a rather easy solution to their problems and that is to establish their own brands, like Kenmore, Craftsman and DieHard at Sears that are equal to or better than other national brands with a superior warranty and great service. Yeah, this will require some work, but they aren’t going to survive without working.
The consumer “not knowing” may just be the biggest barrier to tech purchases. Will this TV work with…? Will this game system work with…? How do I connect these things…? How do I…?
It takes considerably more tech knowledge than is present in the general public. So in theory, this could be a killer move for Best Buy. And, here in the Northwest, their use of the Magnolia HiFi internal stores has delivered that for home sound systems/theater.
My key question: Can they execute it in a way that’s meaningful? Far too often it’s easy to promise something like this. Reality is, they’d be well off to grow this slowly enough to succeed instantly…and drive demand for more.
First, the best way to have technology better your life as Josh Will suggests, is to actually have the technology people want or came for in stock. In my last two attempts I’ve found that not to be the case. Intentionally or not, they were both bait and switch experiences. Not good.
So, there is really that much of a difference between 58,000 square feet and 45,000 square feet. Or, for that matter 30,000 square feet.
The entire thing sounds like a misguided and misdirected strategy that will lead BB further down the road to oblivion.
As in most business challenges, there is no single “silver bullet” to business success. Best Buy must improve the customer experience across all facets to build a sustainable, stable growth model.
At the same time, the Connected Store initiative looks very promising as one of the key pieces to the puzzle. Apple, Microsoft and others offer “genius bars” and integration support for their products, but what if you have technology from a wide array of providers in your house, as is the common occurrence. Who will help you fit the pieces together, both of what you have and what you want to buy, in order to make the technology work together? There may be providers out there, but I do not know of them. Best Buy has the brand presence and connection to the major brands, in order to make that happen. The opportunity looks strong.
Disclaimer: Best Buy is a client of my firm. But the comments are mine alone.
Hard to say whether the new Connected Store will save Best Buy but it’s definitely a step in the right direction. Much has been made in the media of the threat of showrooming but recent research (from Forrester) has shown the threat may be exaggerated. Regardless, brick-and-mortar stores like Best Buy need to offer a better shopping experience to convince all shoppers (whether they’re showrooming or not) that it’s worth making a purchase in the store. This means making the learning, service, checkout, support, repairs, etc. processes faster and easier. And have plenty of items in stock. And offer competitive pricing. The new Connected Stores allegedly do all of that, so we’ll have to see how effective they can be.