Has Walmart come up with an answer to Best Buy’s Geek Squad?

Discussion
Photo: Walmart
Oct 13, 2020
George Anderson

Walmart is taking part in a pilot program to test the viability of offering consumer electronics and technology services to its customers at a fraction of what similar services such as Best Buy’s Geek Squad cost.

The retailer is setting up kiosks — four Dallas-area locations and another in Springdale, AR — that will enable customers to sign up for in-home installation of computing devices, smart home products, televisions and WiFi. It will also offer repair services for damaged smartphones and other electronic devices.

Walmart is looking to roll out the service in 50 locations by the middle of next year, and shoppers in areas with the service will be able to access it online. The kiosks will be staffed by True Network Solutions, which is partnering with the retailer to provide the service.

“With the increasing pace that new electronic devices and categories are released, our customers have told us they need help navigating the tech world,” Darryl Spinks, senior director of Walmart Services, told The Dallas Morning News.

Should the pilot prove successful it may give the retailer a service alternative to Best Buy’s Geek Squad and Apple’s Genius Bar.  Best Buy generates five percent of its total revenues from paid subscriptions and repair services, according to a Talking Business & Politics report.

Walmart is taking a price-centric approach to its competitive program, offering prices as much as 50 percent below what is charged elsewhere. Screen replacements for iPhones at Best Buy cost $129.99; the price for Walmart’s customers will be $79.

An annual subscription to the service through Walmart, which includes a one-time device setup, 24/7 tech support, unlimited virus removal and lost data recovery, costs $89.99. Best Buy’s total tech support subscription runs $199.99 annually.

DISCUSSION QUESTIONS: Is there a compelling business need for Walmart’s tech repair service offering? What will the service’s lower-cost position relative to Best Buy, in particular, do for Walmart’s consumer electronics sales?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Business model diversification is the growth engine of the future for retailers and Walmart exemplifies that trajectory."
"The big challenge is for Walmart to create a distinct brand built more on competency than low cost."
"In the markets where the pilot program is active, a lower price for installation and repair services should attract Walmart shoppers and increase electronics sales."

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30 Comments on "Has Walmart come up with an answer to Best Buy’s Geek Squad?"


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Mark Ryski
BrainTrust

Walmart has realized that there is big money in services and they’re going after it in the typical Walmart way – low price. In the short-term Walmart’s lower cost service will likely not cause a significant impact with competitors since it will take time for the service to gain traction in the market. However I do think this will gain traction quickly with Walmart shoppers who want low prices, and the extra service of getting their devices installed and setup. I believe that this will eventually be a big win for Walmart.

Carol Spieckerman
BrainTrust

Business model diversification is the growth engine of the future for retailers and Walmart exemplifies that trajectory.
Tech service is a logical move to position Walmart as an ongoing destination for technology for the short and long term. As consumers continue to work from home and some kids continue with homeschooling, the launch timing makes sense. Not to mention the holiday shopping season cranking up. Although there are lesser-known providers of tech services, Best Buy is the primary “brand name” provider. That leaves plenty of room for Walmart to make a move.
As Walmart continues to expand services that gain entry into shoppers’ homes, these solutions have the potential to connect and position Walmart as a trusted resource on multiple fronts.

David Naumann
BrainTrust
David Naumann
CEO and President, Cogent Creative Consulting
1 month 11 days ago

It sounds like Walmart feels that it is losing electronics sales to Best Buy for a segment of customers that value the technical support. Best Buy has proven that a Geek Squad type of technical support service is a viable business and it is surprising that other electronics retailers haven’t followed this model. Walmart is outsourcing the technology services to True Network Solutions as a test. I suspect that if it is a success they might acquire the company like Best Buy did with Geek Squad.

Xavier Lederer
BrainTrust

This new service will only be sustainable if it makes economic sense. How will Walmart offset lower prices? Walmart’s method of securing lower prices has traditionally been through higher volumes and more efficient operations. Will these competitive advantages transfer to the world of electronics and technology services?

Perry Kramer
BrainTrust

Walmart has taken a very solid try and learn approach to a market that absolutely exists. Consumer electronics continue to get more complicated as the level of interaction between in-home devices will continue to expand proportionality with the growth of IoT devices. If Walmart breaks even on the service, and removes some buyer apprehension and increases sales of adjacent products it will be a win as it will increase its market share.

Raj B. Shroff
BrainTrust

I think the business need is that customers have told Walmart they need help navigating the tech world. Sounds like they’ve found an unmet need in terms of affordable tech support for their shoppers.

The service’s lower priced position is aligned with what the Walmart shopper needs. It could provide a boost to Walmart sales if shoppers are trying to decide where to buy their electronics. Or if they’ve bought items elsewhere and need help. Definitely an opportunity for them to gain share with their loyal shoppers who have either never considered this or who have used Geek Squad but are attracted to this lower price offer.

Maybe they can deliver groceries while they are making the house calls.

Cathy Hotka
BrainTrust

A few weeks ago we were talking about the potential for smart home services. Imagine the impact if a juggernaut like Walmart could lead the way. PC service today, smart lighting tomorrow.

Jeff Sward
BrainTrust

Wow. Talk about a market share grab. Talk about a recurring revenue model. Talk about aggressive. Talk about smart! Walmart is giving no quarter to its competition on any front.

Brett Busconi
Guest

Yes there is. Walmart understands that there may be a perception from the buyer that Best Buy can better cover their needs from start to finish on large purchase point products. If they can chip away at that perception I am sure it is a winning idea for them. Will they take it to the level that Best Buy does? Best Buy has a division of sellers who will come to your home, measure and spec what the installation/replacement efforts look like, and on larger purchases will include the installation at a nominal cost. They also offer a concierge level service to the entire process — and throughout any warranty period.

If Walmart commits to this level of service it could have an even more substantial impact on their sales for these large ticket items head-to-head vs. Best Buy.

Richard Hernandez
BrainTrust

I can see why Walmart has decided to add this option but, as an electronics consumer, Walmart would not be my go-to place to for a mobile phone replacement or computer disk recovery. Even though the pricing would be lower, I think it will be a steep curve to get the customer base to have a level of comfort using them to troubleshoot laptops, install home theater systems, etc. Walmart would have to really think about hiring the right people to gain the confidence of the customer base to grow that business.

Gary Sankary
BrainTrust

In-home services are really difficult to set up from scratch. There are a lot of variables that have to be managed to balance customer service commitments and operate profitably; managing contractors and liability, appointment scheduling and service commitments, routing and asset management… What happens when a truck is missing a part or an appointment runs long? It is an extremely complicated proposition. It has taken a decade to bring the Geek Squad to where they are today. And remember they were an acquisition by Best Buy, Best Buy didn’t have to learn these capabilities from scratch. There’s going to be a steep learning curve for Walmart to make this scale. I wouldn’t bet against them, but I don’t think we’ll see this become a competitive threat to the Geek Squad for a while.

Joe Skorupa
BrainTrust

I agree this is a minor business opportunity for Walmart. The Geek Squad was launched at a time when when the PC wars were producing a lot of junk products that were not user friendly, standardized or performed well even when they worked. So there was a huge need back then. Even if Walmart stole 100 percent of the Geek Squad’s subscription support business it will not become a major sales and profit center. However it could morph into a sales platform using member-only coupons and discounts to drive future sales, upgrades and cross-sell opportunities. If this is the plan, then it could evolve into a bigger initiative than it now appears.

Ricardo Belmar
BrainTrust

I would not be surprised if there is a vision at Walmart where some portion of these services become part of, or maybe include discounts, Walmart+. Imagine if Walmart+ included discounted options for repair services of electronics items purchased! And as Cathy Hotka mentioned, what if this expanded to cover smart home items? It all depends on how efficient and skilled the True Network Solutions staff is compared to the Geek Squad from Best Buy.

Jeff Hall
BrainTrust

This initiative, once scaled, could prove to be a superb second-mover advantage to Walmart. The market is already primed, with Geek Squad having led the way. The demand for these types of tech services will only continue to grow and with the ability to significantly undercut what is really the only national player, Walmart can leverage its footprint to establish massive price advantage. If the new service can execute as well as Geek Squad then yes, Walmart has come up with the right formula to perhaps not displace the market leader, but be a solid alternative choice.

Peter Charness
BrainTrust

I think Walmart will have a tiny bit of a brand image problem with this one relative to Best Buy. (Want to set up that $2,000 home theater…?) But low prices will certainly help bridge that gap. I am left wondering if the team actually doing the work will become the next “gig workers” — a freelance pool of installers and tech support waiting for either Best Buy or Walmart to send them their next task.

Ian Percy
BrainTrust

I agree almost totally with you, Peter. My issue is that I don’t think “low cost” from Walmart will ever build the bridge to “competency.” With the complexity of technology these days, this equates to bargain priced brain surgery.

Gary Sankary
BrainTrust

You make a great point about the freelance pool of contractors. I can see an app where vetted (and bonded) service folks log in and get a day’s appointments.

But how will they handle the branding? Sears Home Services, Geek Squad — they all use branded vehicles and uniforms. I do agree with you that freelancing is the way to scale this service.

Ian Percy
BrainTrust

It’s not about the cost, it’s about the competency!

Apple’s Genius Bar works because they are Mac experts. Best Buy is trying to handle both Macs and PCs even in their major repair centers. As a Mac guy my only advice is NEVER buy an Apple product from Best Buy nor take one to the Geek Squad for repair! I’m resisting providing a description of the absurd multi-month process of getting a Mac Book Pro fixed that Best Buy sold and had under warranty. Finally they admitted defeat and gave me a new one.

The big challenge is for Walmart to create a distinct brand built more on competency than low cost.

Richard Hernandez
BrainTrust

Ian, thank you — I went through this as well and thought this was a great option to get an Apple device fixed since the nearest Apple store was four hours away from me. After several attempts to fix it, they finally suggested I take it to the Apple store. I drove the four hours and they had it fixed (a firmware issue) and I was on my way. Lesson learned.

Ian Percy
BrainTrust

We’re both smarter now, Richard! Mine was a hardware issue too. For others in a similar situation — instead of giving a Mac product to the Geek Squad, call AppleCare and they will send you a shipping box so you can send your computer to them. You’ll get it back fixed in relatively short order. I learned that from an anonymous Geek Squad guy.

Lee Peterson
BrainTrust

Three things I love about the Walmart that we’ve been experiencing these past 10 years: 1.) they’re not afraid to test anything (like Geek Squad-ish services); 2.) they SCALE something if they know the customer likes it, regardless of the test (see 4,000 stores with BOPIS pre-COVID-19) and finally; 3.) they are still not afraid to be a fast second — so what if Best Buy does it? So what if Amazon has Prime Day? Those are good ideas and they didn’t let them slide which shows ego-less, fast fail management at its best. Dear “Spark,” after years of low-price brand woes, you have stepped up more than any other retailer, signed: Big Fan.

Raj B. Shroff
BrainTrust

I totally agree, Lee.

Brandon Rael
BrainTrust

The resurgence of Best Buy was not only attributable to their pricing, promotions, and in-store experience but also to their operating model moving to one that focused on the customer and a service-first strategy. Every day low prices are a productive strategy for most categories, however there has to be a service and expertise value proposition to help differentiate yourself from Amazon’s scale and reach.

Walmart continues to drive its digital transformation and customer-first strategies, as they take on the competition across so many categories. They will have a tough go with Best Buy, who have become synonymous with services, expertise, and outstanding customer experiences.

However there is room for Walmart in this space, as they address the value-driven consumer who may need some technical support and expertise in-store.

Ed Rosenbaum
BrainTrust

I am surprised it took Walmart so long to figure out there is money to be made in service. That said, I think they will have a difficult time figuring out how to get Geek Squad members to change. My guess is they will stay loyal to Best Buy. I will add that Geek Squad service varies from store to store. Some stores’ service is excellent. Others need some training in customer service. I have experienced both in two stores located within a six mile radius of my house.

Steve Montgomery
BrainTrust

With more people WFH, at home learning, home schooling, and social distancing driving up the sales of PCs, laptops, and tablets and all the peripherals, there is certainly a need for this type of service. Walmart will not only have a price advantage, but a location advantage as well. There are just over a thousand Best Buy locations compared to Walmart’s almost 5,000. The disadvantage is, will people have the same trust factor in Walmart as they do in Best Buy to handle any issues that arise?

Ananda Chakravarty
BrainTrust

The Walmart move is a smart move to reinforce their consumer electronics department. Not necessarily going head to head with Best Buy, but more catering to their own customer audience and competing with the likes of Target by offering a service in addition to the product. A good service add-on with talented associates would influence much stronger electronics sales.