Fitness Equipment Health Opportunity for Best Buy
Best
Buy has been branching out a lot lately. It’s moved into musical instruments
as well as electric bikes and scooters, and now it’s looking to pump
up (insert groan here) its volume with the sale of fitness equipment
in stores and on its website.
While
the move into fitness equipment may seem like a stretch (repeat groan)
to some, Best Buy sees it as a natural next step for its business.
“We’re
offering the latest and greatest technology in health and fitness,” Steve
Trier, director for new categories at Best Buy, told The Associated
Press. “There’s
been a lot of change in that industry and what these products can do
for our customers and their lives.”
Best
Buy will offer both electronic and manual equipment
for a wide variety of physical activities, including
running, swimming, yoga, walking and weight lifting,
in a 40-store test at locations in Arizona,
Colorado, Iowa, Maryland, Massachusetts, Nebraska,
New Mexico and Texas.
In addition to the sale of the product, Best Buy said it will provide added service for fitness equipment customers with its Geek Squad unit.
“We’re
constantly looking for the most innovative solutions to address our customer’s
lifestyle needs,” said Steve Trier, senior director of customer research & development
at Best Buy, in a press release. "Customers expect quality, selection
and service from Best Buy, and with health and fitness, we’re matching
the right combination of gear with experienced BlueShirts and Geek Squad
to help them manage and stay motivated by their fitness routines."
Discussion
Questions: What is your reaction to Best Buy’s test of fitness equipment?
Are they moving beyond their "comfort zone"?
Instead of exercise equipment (which I do agree is a bit of a stretch), why don’t they expand their home entertainment furniture offering? That seems like more of a ‘fit’ then exercise equipment (see last week’s discussion about BB dropping the ball on a sale).
Only time will tell. But it looks like a great market to attempt to go after. More fitness stuff is going high tech and the people who visit Best Buy fit the demographic of a buyer of fitness equipment, so if you have the available real estate in your store, it is worth a try.
If it’s electronic, Best Buy wants to sell it. And why not? Today’s consumer wants to buy from a trusted name. Best Buy offers that, along with the tech support to set up and service the devices. It’s a bold move on the part of Best Buy…just in time for the holidays and then New Year’s resolutions.
To me, this makes some sense. It’s all part of an in-home experience/lifestyle. Brands are continually expanding their reach into their customers’ lives with varying degrees of success. A recent trip to Best Buy proved to me that they were much more than the electronics store they started out to be already.
With the growth of the fitness category, this should be a good addition for them.
I’m with Max on this one. Best Buy’s customer base fits the demographic of the exercise equipment buyer. Timing is right. Definitely worth a shot.
Best Buy has so many of the right pieces to pull this off. Most important is a large base of people who like to shop there, a good target consumer for fitness equipment, sales support, and loyal online shoppers who search and compare before coming into the store. With the Wii getting such great acceptance, the timing is right for Best Buy to expand into fitness. They understand merchandising, location, and opportunity very well.
It’s a natural. High-ticket, technologically complex products for shoppers who seek enlightenment through consumption.
Feature and quality comparison of exercise machine models is very challenging for the consumer (try shopping online for an elliptical trainer and see what I mean).
Even better, treadmills and exercise bikes built for home use tend to break down a lot under regular use, so the potential for extended warranty and service contracts is high.
If Best Buy manages to position itself as a trusted resource for home workout equipment, it may well wrestle sales away from Sears, Dick’s and Sports Authority.
Watch them closely–Best Buy is likely to knock this merchandise line out of the park! They know their customers and they are focused on the right things, when Steve Trier points out that Best Buy customers expect quality, selection, and service.
Based on the September, 2009 Consumer Intentions & Actions (CIA) Survey of 8,526 Adults, which has a close look at the Sporting Goods/Exercise category, the BEST BUY customer is an enthusiastic user of Sporting Goods. Here are some facts, only using Index numbers compared to the General Population for the Best Buy Consumer, that substantiate that point:
Best Buy shoppers are younger, Index of 108 for 18-44 Adults
Best Buy shoppers are affluent, Index of 114 in earnings
Best Buy shoppers own homes, Index of 105
Best Buy shoppers like specialty store shopping, Index 130-180
Best Buy shoppers use specialty stores for exercise equipment, Index of 168, and their reasons compare to the general populations are:
Selection, Index 132
Location, Index 129
Quality, Index 128
Service, Index 129
Advertising, Index 125
Knowledgeable Sales Staff, Index 139
Newest Equipment, Index 132
Newest Styles, Index 129
Store Appearance, Index 140
When asked how much they spent on sporting goods/exercise equipment in the past 12 months, the Best Buy customer said that they spent at an Index level of 110.
If Best Buy commits to solid execution on this strategy, they have a built-in audience that should make this category a solid win–the benefit of all that “heavy lifting” and “stretching.”
Fitness equipment is a natural extension for Best Buy. Independent fitness stores struggle because they lack the traffic needed to really move items. Best Buy has the traffic to drive sales. That said, they need to be sure and take the move seriously. Best Buy has built a strong reputation for providing quality brands at a fair price with a strong technical backbone (Geek Squad) to support what they sell. As long as they can hire Geek Squad members that understand fitness equipment and they focus on offering quality brands, I see this move as great one.
What is currently an unknown is what amount of floor space will the department take and will the sale of fitness equipment be equal to or greater than other departments when you measure sales and profits per square foot.
This seems a good play for BB. High tech, electronics, high average ticket–all fit neatly into the BB operating model.
There’s an interesting question buried in here. To be productive, a presentation of fitness equipment takes a lot of floor space. What is BB giving up to find that space?
I’m with Doron on this one. I haven’t seen the demographics that many of the panelists cite indicating that their demographics match those who shop for fitness equipment. I am a little doubtful that they are a complementary match in the majority.
A question that could be asked in assessing the appropriateness of this move would be to review the existing sales and market of fitness equipment in the US. In a very unscientific attempt to do this, I googled trends on sales of exercise equipment in the USA. In an article published in 2008 by SGMA, they note that while they believe that there is potential for growth, the fitness segment in the US is “showing signs of maturity.” The article went on to cite the Sporting Goods Manufacturers Association that while the fitness category has significant participation, the market itself is and has been stagnant over the last several years.
Now considering where most fitness equipment is sold–in specialty stores where product knowledge and customer interaction with sales teams are likely high–I’m not sure I am convinced that Best Buy can offer a service advantage.
Doron also mentioned that Best Buy may have more luck in adding a category, such as home furnishings, that are a more complementary line to its core product categories. I agree with this as well.
When adding product lines or categories, it is essential that any retailer define their box and stay within that box. The past is littered with retailers who attempted to operate or sell product outside their core competency and failed.
Best Buy is reshaping itself. It is clearly looking for product lines consistent with their customer base and their positioning that moves away from the total reliance on consumer electronics, and the current and future competition and low margins in these lines.
Best Buy is clearly doing its homework and while not every test will work, Best Buy will not see themselves following the recent fate of other consumer electronics stores. One thing they have strategically decided…they are not a consumer electronics store!
I sincerely believe that the main way that BB can supersede the competition is through superior customer service. They absolutely have to have a well-informed staff, that is fully equipped with the knowledge of handling the equipment, and repairing it, and setting it up, etc.
BEFORE they begin to market exercise equipment, the staff has to trained. Otherwise, this business venture will be a complete flop. The competition is smarter, more experienced, and already has an established, loyal clientele, and…already has the reputation it needs.
BB good luck!
The great thing about Best Buy is that they TRY. I mean, they must have some info about their target customer that made them put this effort together in the first place, but the main point is that they’re going to execute the idea and see if it works. Best Buy is not afraid to fail, which makes them eons ahead of the competition.
Well it seems like a logical step. It’s a high-ticket, electronic item. However, they would need to invest in training store personnel to sell fitness equipment, since selling fitness equipment needs whole different skill-sets as compared to selling electronics.