Best Buy makes a big bet on health tech

Discussion
Oct 07, 2019
Tom Ryan

Best Buy Co. last week set a goal to provide five million seniors with health monitoring services in five years, up from one million currently, as healthcare shifts to a primary growth opportunity.

Providing home health tech services is a cornerstone of a five-year plan to reach $50 billion in total revenues by 2025, up from $43 billion expected for the current year, CEO Corie Barry revealed in her first presentation to Wall Street since succeeding Hubert Joly in June. 

Best Buy sees a $50 billion market in health tech as the U.S. population of 65 and older is set to double by 2060. Two out of three seniors live with two or more chronic conditions and 90 percent of them want to stay at home.

“We’re looking at a population that is aging incredibly rapidly. It’s massive,” Ms. Barry told reporters.

To support the push, Best Buy spent $1 billion on acquisitions over the last year, the biggest of which was last October’s addition of GreatCall, a seller of emergency-response systems. Other purchases include Critical Signal Technologies, known for remote patient monitoring, and the predictive healthcare technology business of BioSensics.

Remote monitoring tools may include algorithm-driven pendants that track how a senior is walking and predict the risk of falling, refrigerators with sensors that measure whether an individual has been eating, and wireless scales that monitor patients with congestive heart failure. Collaborations are expected with insurers, who are seeking ways to monitor patients at home to avoid hospital stays. 

The expanding health tech offerings will complement Best Buy’s Geek Squad and In-Home Advisors tech repair and home consulting services. 

A related 2025 goal is to double what Best Buy calls “significant customer relationship events” to 50 million. That count includes Total Tech Support and other paid memberships, homes visited via In-Home Consultation and other services, active digital engagement on Best Buy’s mobile app, financial services provided and senior lives supported. Said Asheesh Saksena, president of Best Buy Health, in a blog entry, “Our mission is simple: enable seniors to live longer in their own homes with the help of technology and support.” 

DISCUSSION QUESTIONS: What do you think of the growth potential for health tech at home and is Best Buy well positioned to exploit it? What steps may Best Buy have to take to fend off competitors?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"Best Buy already recognized that 'tech' isn’t just HDTVs and computing devices, but extends to all aspects of its shoppers’ lives. Good move."
"Imagine the value of the data for surrounding their customers (and the extended family) with care."
"The irony is they call it “health tech” when there’s a growing amount of data about the negative health consequences of living in this wireless IoT soup."

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23 Comments on "Best Buy makes a big bet on health tech"


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Dick Seesel
BrainTrust

Geek Squad meets Geezer Squad? (I can joke about aging now that I’m on Medicare…) This seems like a good marriage between Best Buy’s tech reputation, its service network, its dominance in the “smart home” product category, and the growing demand for healthcare devices and expertise. Best Buy already recognized that “tech” isn’t just HDTVs and computing devices, but extends to all aspects of its shoppers’ lives. Good move.

David Naumann
BrainTrust

Very clever Dick. I love the “Geezer Squad” but I doubt everyone would embrace it. 🙂

Dick Seesel
BrainTrust

Oh, I doubt anyone would embrace it! Definitely not recommended as a branding idea for Best Buy.

Jeff Sward
BrainTrust

Gets my vote. Actually pretty clever!

Bob Amster
BrainTrust

In the immortal words of that great sage Freddie Mercury: “We are the Champions, my friend!” (The geezers, that is!)

Neil Saunders
BrainTrust

It is necessary for Best Buy to look beyond its core electronics categories. These are low margin and subject to very heavy competition and while Best Buy has managed to hold its own, it needs to explore alternative growth vectors to boost its future top and bottom lines. Healthcare makes sense as it is a lucrative and growing area in which many consumers are interested. Given Best Buy’s technological background its focus should be on service and products that allow health monitoring. A particular focus on monitoring for older consumers, many of whom shop at Best Buy, make sense in terms of a target market.

Dave Bruno
BrainTrust

Health tech at home has the potential to be a great strategic investment for Best Buy. One of the keys to success will be their ability to engender trust from shoppers/patients. If Best Buy executes in-home health tech as well as they have in-home A/V tech (with Geek Squad), I suspect trust will be quickly (and well) earned.

Jeff Sward
BrainTrust

The opportunity here for Best Buy is huge. This is a very simple exercise (no pun intended) in connecting the dots. Technology and a growing universe of gadgets and apps are increasingly enabling a more connected and a more seamless healthcare process with better outcomes. And the U.S. has a lot of room for better healthcare efficiencies. Best Buy is perfectly positioned to play a major role in simplifying the process for the consumer. It’s an extension of the platform they currently provide for phones and computers. Just help me get the gadget and app up and running and the customer will have more and better information about diet, exercise and lifestyle.

Phil Rubin
BrainTrust
14 days 2 hours ago

It’s fascinating to see brands like Best Buy address what we’ve all known has been coming for more than 30 years: the greying of America.

Most of the major brands we work with have health and wellness as a top priority for their business so this is not surprising at all and yes, of course, there is huge growth potential for Best Buy (and others) here.

Best Buy has a lot of trust and the customer relationships – in part via Reward Zone – to make this work. Great to see them focused on customers, still.

Bob Amster
BrainTrust

The move makes sense. Best Buy sells electronics (mostly) for the home. The new category of health tech is complementary to others in the Best Buy assortment. The only question is whether or not the demographics of the CE products are the same as that of health tech. If you sell it, will they come?

Bob Andersen
Guest

Best Buy’s core customers are or were baby boomers which is the right demographic and BBY is positioned perfectly to take advantage. But BBY is a merchant-driven, not a marketing-driven company. This is a huge opportunity, but to fully leverage, BBY will need to commit an equal amount in resources to effectively market, advertise and promote. We’ll see.

David Weinand
BrainTrust

The services play is smart for Best Buy since margins on most electronics are so thin. With advancements in health tech, I see no reason why Best Buy can’t get its share of the pie – their scale, brand awareness and current database of customers will help them get a head start on smaller competitors as they roll out services.

Cathy Hotka
BrainTrust

This is very smart. Sure, healthcare is a big opportunity, but well-heeled Boomers will welcome an opportunity to create a relationship with Best Buy to purchase electronics and peripherals. This sounds like success.

David Naumann
BrainTrust

Home health technology devices and services is a fast growing market. Many doctor visits will become a thing of the past with video calls and devices in homes to measure or monitor heart rates, blood pressure, temperatures, etc.

Best Buy’s Geek Squad can help people set up their health monitoring systems and train them on how to use the technology. This is a great revenue opportunity for Best Buy.

Bill Hanifin
BrainTrust

Recognition of the opportunity to provide healthcare-related tech to members of an aging population is a brilliant extension of the Best Buy brand. The opportunity is to create relationships through technology with seniors and others who can benefit from these products.

The missing piece in today’s consumer electronics market is to fill the gap in understanding so that people buying tech can get the greatest benefit from it. Often we buy up the next cool gadget only to see it land in a drawer soon thereafter.

If Best Buy can provide the service, information and education to empower people of any age to take full advantage of the gadgets they buy, they will have a successful new area of business that will support the stated 2025 goal to double what Best Buy calls “significant customer relationship events.”

Dave Nixon
BrainTrust

With the shift to services over simply product retailing, Best Buy is in a unique position to own a big stake in this market, and it will drive the other services they are investing in like “Total Tech Support,” “In Home Advisor” and Geek Squad (obviously). With their full service, full lifecycle networking and product support services, they are in the best position to capitalize on this growing need through connected devices and connected home. Imagine the value of the data for surrounding their customers (and the extended family) with care.

Oliver Guy
BrainTrust

It is going to be an interesting area, one where we potentially have a number of different players who could be considering moves into that area — Apple, the pharmacy chains, and healthcare companies. But this is an area that also illustrates merging and convergence of industries – retail, healthcare, insurance and more. The question is, is Best Buy well-placed to do this? For example, would CVS/Walgreens be better positioned in terms of being healthcare focused?

Ryan Mathews
BrainTrust

First of all, it’s weird that some brands and retailers seem to be just getting around to the fact that people get older, sicker, still have some disposable income, and don’t necessarily die. Prescient marketing at work again! Secondly, I think it’s a great idea to address this part of the market — an idea I’ve been pressing since I was in my early 30s hoping things would be in place by the time I reached my dotage. As it stands the score is: Dotage 1; Retail 0. But more seriously, this is a good idea but there is a caveat. Best Buy runs the risk of adopting a “barbell” marketing strategy here; trying to serve the needs of technologically sophisticated digital natives as they become a majority of customers, while having an aggressive outreach to seniors. I’m not saying it can’t be done, just that it can’t be done with your eyes closed.

Stephen Rector
BrainTrust

This is a win-win for Best Buy – diversification of product categories while catering to a target customer that has money to spend. Health tech products will continue to be a huge growth category as the U.S. continues to age – Best Buy is smart for making this a focus for the company and making noise about it in the media.

Ian Percy
BrainTrust
There’s no question that the “senior” crowd is growing – over twice as fast as the vaunted 18 to 45 group. Increasingly this is becoming a highly tech-savvy group though the 80-plus sector isn’t quite there yet. That will soon be some of us faster than we like to admit. Given that prognosis, why is only 10 percent of market spend focused on this demographic? “24 Stats Marketers Need to Know about Baby Boomers” is a mind-blowing article. I caution about the drive to sell more and more wireless healthcare devices. The irony is they call it “health tech” when there’s a growing amount of data about the negative health consequences of living in this wireless IoT soup. This is especially true for youngsters and oldsters. Most of the warning is coming from Europe, almost like the U.S. won’t admit to this until there’s a problem too big to ignore. The prediction is that 50 percent of the population will have “electro-hyper-sensitivity” to EMF pollution “raising new challenges for medicine and society.” Then there’s the… Read more »
Sterling Hawkins
BrainTrust

I think it’s a good move for two reasons: 1. There’s a significant and growing need and 2. Technology and services can fit that need in new and innovative ways. Establishing themselves as an early entrant into the new senior tech + services market builds relationships with customers that have a high switching cost (as your data, support and knowledge will already be with Best Buy).

Mel Kleiman
BrainTrust

For the two questions asked at the beginning of the discussion concerning growth potential and competition, the answers are simple.

Yes, Best Buy is well positioned and possibly better positioned to be a major player in the providing of technology related services to seniors.

In regard to competition, I would not worry about it. At this point, I would be inviting it into the market to help educate the buyer.

Jane Sarasohn-Kahn
Guest

Best Buy’s acquisition of Great Call was more than bringing in a “senior phone” device. BB Health now has baked in Great Call’s expertise and insights into how older people live and think, and can leverage and continue to build on trusted relationships with people seeking to age in place at home for as long as they can. Best Buy Health has a very ambitious goal to generate $50 billion in this business in five years’ time. That’s the equivalent to 50 pharmaceutical blockbusters (which are defined as billion-dollars-a-year in revenue). Best luck to Best Buy Health with this huge objective, morphing from goods-to-“service-as-a-service.”

wpDiscuz
Braintrust
"Best Buy already recognized that 'tech' isn’t just HDTVs and computing devices, but extends to all aspects of its shoppers’ lives. Good move."
"Imagine the value of the data for surrounding their customers (and the extended family) with care."
"The irony is they call it “health tech” when there’s a growing amount of data about the negative health consequences of living in this wireless IoT soup."

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