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[10 comments]

Best Buy Taps Home Energy Market

November 16, 2011

Best Buy is slow-walking a new home energy concept via a web portal and in-store departments in locations in California, Illinois and Texas.

According to a company press release, Best Buy's Home Energy concept provides products and services to help consumers understand where their energy dollars are going and what they can do to reduce costs.

"Through several small-scale experiments over the past two years, from home energy audits to installation of home charging stations for electric vehicles, we have learned there is real consumer interest in options to cut energy costs and use in their lives, particularly in the home," said Neil McPhail, senior vice president, new business customer solutions group, Best Buy. "Our role is to help consumers make the most of the technology in their lives, and the Home Energy concept is our latest experiment that will demonstrate the knowledge and expertise of our employees, and how our brands and our channels can help consumers understand how to own, use, and maintain energy efficient technologies."

According to a report on the GigaOM site, Best Buy's in-store area was located at the back of the store in San Carlos, CA. While not front and center, the report said consumers appeared interested in the interactive layout, which emphasized how appliances could be digitally linked to more effectively manage home energy needs.

Each of the three Home Energy stores showcase partnerships with local energy partners including Constellation Energy in Chicago; Reliant in Houston; and Pacific Gas and Energy Company in San Carlos.

The online component emphasizes education in addition to products with video demos, an energy assessment tool and product and solution recommendations.

FINANCIALS:     [NYSE:BBY]

Discussion Questions:

Discussion Questions: Is home energy management a consumer market opportunity that is ready to take off? What will it take to succeed in the marketplace, and do companies such as Best Buy have a shot when competing against the likes of Home Depot and other DIY chains?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How would you rate the home energy management market opportunity at retail?

Comments:

Consumers have always been interested in their home energy cost. The degree of interest has varied based on variety of factors with the main two naturally being income and energy cost. Given the current state of the economy, energy management has grabbed a lot of people's attention. However, the size of the opportunity is going to be impacted by the cost to cure. If you can save $500 a year in energy but it is going to mean laying out $5,000 now you are not likely to get a lot of takers.

The question of Best Buy versus DIY will be determined by a number of factors. Best Buy certainly has a lot more traffic than does either Home Depot or Lowe's and is in a better position to sell electronic solutions. Their Geek Squad had brand awareness for home installation of electronics versus the DIY contractors. The solution set they are offering has a broader umbrella of services than just home energy management. However, the DIY stores have more mind share when it comes to this type of projects. One thing for sure, it that this should be a wake-up call to Home Depot and Lowe's.

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Steve Montgomery, President, b2b Solutions, LLC

I wish. But my cynical side says this will be like trying to get car owners to save money by changing their own oil or telling them to check their tire pressure regularly. Lots of luck.

The fact that people interact with a display is no indication they'll actually spend the time and money for energy efficiency once back home. And setting a prognosis based on early adopters is also a little risky.

I worked with a brilliant PhD energy specialist while he did an 'energy audit' for an organization. He pointed out how if they changed the design of the air vents they could reclaim X units of energy, if they reconfigured the lighting they'd get back 2X and on and on. A BTU here and a BTU there. He was absolutely right and the recommendations bullet-proof. But for the most part the client just rolled their eyes. Just too much work! I'm afraid that in our entitlement-based society that will be the result here too. Unfortunately.

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Ian Percy, President, The Ian Percy Corporation

Best Buy is adding another link in the chain towards building their 'Win the Home' initiative that began back in 2003. I believe Best Buy has a great opportunity to leverage their position as a trusted resource in developing the connected 'smart' home. Smart home energy should have been an initiative that both Lowe's and Home Depot spearheaded and owned given their customer base. They will certainly be pressing this initiative as well. It seems to me there would be a tremendous business opportunity to create a strategic partnership with this initiative. Here is yet another opportunity to design and implement a terrific omni-channel digital marketing solution to offer a relevant and personal dialog with your customer as well as establishing a 'customer for life' strategy. Hey Lowe's or Home Depot, give me a shout!

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Adrian Weidmann, Principal, StoreStream Metrics, LLC

I'd say Best Buy is better positioned than others to engage consumers in home energy management. Their increased focus on services, from consulting to installation, should further their value proposition for Geek Squad to be a go-to source for in-home services.

Also, the appeal of low cost, more interactive solutions to home energy monitoring are benefiting from consumers' increasing interest in the trend of gamification. It's well established that when you present consumers with stats and apps that make a game out of taking positive steps, the results are significant. Everything from Nike+ to stop-smoking apps are showing the power of engagement based on feedback loops.

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Matt Schmitt, President & Chief Experience Officer, Reflect

Best Buy may be on to something here. Home management systems and hardware -- including wireless and wired computer networks, multi-room audio systems, remote lighting controls, energy management controls, video security systems, even solar power systems -- have much growth potential.

This at a time when much home entertainment is increasingly accessed through the cloud. A comprehensive offering would include home network servers; power inverters for photovoltaics; perhaps even heating and cooling systems. Not that big a stretch from major home appliances.

All these home systems have a heavy service component, which means BB could leverage and widen its Geek Squad organization to provide more types of value-added help to homeowners, including installation and on-call troubleshooting.

Home Depot and Lowe's should rightly covet this business too. They come at it from a different perspective, but no matter. I foresee a spirited rivalry in this sector.

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James Tenser, Principal, VSN Strategies

Home energy management taps into the "green" movement, which resonates with millions of consumers, on one level or another. Ready to "take off"? It depends wholly on people making a conscious decision to make a lifestyle change.

But it can start in just this way: an everyday retailer jumping on the bandwagon, and providing cost-efficient energy solutions. Best Buy is smart from a business perspective to get involved now, and, it's socially commendable.

The green movement is something people are passionate about, and there's a buzzing dialogue out there about it. As marketers, we can capitalize on it. But the approach has to be sensitive to consumers, and implemented carefully. Best Buy could, for instance, launch a social media initiative around this, and if done correctly, they'd create a ton of engagement.

Utilizing nontraditional marketing strategies like social media to market their Home Energy Centers could make Best Buy the one to compete against.

Ronnie Perchik, Founder/CEO, PromoAid

Who will you trust with cool home energy gadgets like this -- the Best Buy Geek Squad, or a random contractor from HD?

'Stanaggie'

Best Buy's Home Energy concept seems like a smart move. Home energy management is by no means a sexy topic, but the retailer is wisely taking into account where consumer lifestyles are today and where they're going tomorrow. For instance, today we have more consumers looking to be greener, more economically anxious consumers seeking ways to decrease home-related costs, more consumers living in wired homes, more consumers making decisions about their homes' power supply options, and more consumers with a variety of appliances and gadgets that use various amounts of power on an almost 24/7/365 basis. We can expect all those areas to grow in importance going forward.

Best Buy is smartly dipping its toes in the home energy management waters to find out what works for consumers and what doesn't. As the nation's leading consumer tech retailer, it makes sense that the retailer is where consumers will go in search of home energy understanding and answers. It's much like how consumers now look to retailers to help with healthcare (e.g., store clinics, pharmacist consultations, health-related classes/literature, etc.).

There are factors outside of Best Buy's control that could impact the Home Energy concept's success, like any number of potential, future changes in the energy industry and in appliance/technology design. For such reasons, it's probably best to roll the concept out very slowly and fine tune as they gather more experience. In the long term, the concept will likely morph, but it still has the potential to become a concept that generates high wattage and dollars.

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Tim Henderson, Editor/Writer, Independent

I love this idea. I will lose faith in it, however, if they qualify for "green" funds from the Federal Government. That seems to be the kiss of death. And, at a time when so many are losing their homes or just barely hanging on to them, are they willing to invest in a house they might lose?

On the other hand, developers could include the requisite wiring, etc., in new homes and apartment buildings that would enable easier installation of consumer-supplied home energy management systems. It's a selling point, like free Wi-Fi currently offered in many apartment complexes.

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M. Jericho Banks PhD, President, CEO, Forensic Marketing LLC

Best Buy is turning into the department store that Sears could have been. The tests will tell the story. Congratulations to Best Buy for having the vision to try innovative concepts.

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Christopher P. Ramey, President, Affluent Insights

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