Best Buy Sees Retail in Hospitals

Discussion
Dec 22, 2010

By Bernice Hurst, Contributing Editor,
RetailWire

Flower shops, coffee shops and other places to buy books, magazines
and gifts are ubiquitous in hospitals. What is there to add?

Best Buy sees
room for cell phone chargers, digital cameras, data cards, sound-canceling
earphones, small TVs, DVD players and at least a few other items. As a result,
the electronics retailer has negotiated a sales area in the gift shop of Memorial
Hospital in South Bend, IN.

Under the partnership, Best Buy will supply a selection
of products for sale within the gift shop and the hospital will retain a percentage
of the revenue generated. Best Buy’s first-ever Quick Picks display features
a mix similar to many of the vending machines it is featuring in airports
for travelers, although they’re aimed at patients, visitors and staff.

Diane Stover,
the hospital’s vice president, thinks the new link-up means
differentiation.

"Life doesn’t stop for any of us when a loved one is in the
hospital, and as our world becomes more electronically connected, patients
and visitors are often in need of items to help them stay connected," said
Ms. Stover in a statement from Memorial Hospital. "We developed this project
prototype as a way to make it convenient for visitors, staff and patients to
get things they need. This new model helps to enhance the overall experience
and generate new revenue for our organization."

Joe Weiss, Best Buy account
manager for Indiana, added in the statement, "When
Memorial suggested the idea we thought it had merit. We hope this test will
lead to a nation-wide program that will help make things a bit easier for families
with loved ones in the hospital."

But two newspapers in Britain spotted
one potential downside. Reporters found that both Marks & Spencer and WH
Smith charge more in hospital stores than for identical items purchased in
the high street. The Daily Mirror sent
reporters to Marks & Spencer’s outlets in May 2010 but The Daily
Mail
did its WH Smith price check way back in January 2009. It can only
be hoped that the convenience upside offered by Memorial and Best Buy are
priced at a downside-avoiding level.

Discussion Questions: How would you rate the retail opportunity for consumer
electronics at hospitals? What other retail opportunities may be missing
from hospitals?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

15 Comments on "Best Buy Sees Retail in Hospitals"


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Dan Berthiaume
Guest
Dan Berthiaume
10 years 4 months ago

The idea has merit, and will gain merit as e-books continue to overtake physical books and games, music and video content continue to overtake reading in general. Adding a small premium for convenience is to be expected. If Best Buy can get pricing in check and develop a solid marketing/merchandising strategy, this pilot may be the starting point of something which in 5-10 years will be a standard feature of hospitals everywhere.

Steve Montgomery
Guest
10 years 4 months ago

The opportunities for small consumer electronics should be reasonable good. Making it successful will naturally depend on selecting the right items and pricing them right. In this environment, there are two consumer groups. A staff that is relatively permanent and a population that is reasonable large and turns over every few days. Both have the same needs as everyone else and could be buying items for themselves or as gifts for someone else.

Gordon Arnold
Guest
10 years 4 months ago

With proper care and insight this is a great opportunity. My sources tell me that investment with a hospital that has an emergency room is a poor choice. It is rumored that there are so many non-paying customers that many of these institutions are failing to the point of closing shop.

David Biernbaum
Guest
10 years 4 months ago

The idea for consumer electronics sales in hospitals has merit if the product selection is carefully thought out and if the pricing is fair and realistic.

Doug Fleener
Guest
10 years 4 months ago

A lot of these stores struggle, and this is exactly the changes they need to make to their product mix. Most of these stores are still gift stores, and instead they need to become more of a onsite convenience store. While many of them are making the shift, they are somewhat hampered by a limited paid staff.

Camille P. Schuster, Ph.D.
Guest
10 years 4 months ago

Certainly patients and people waiting for patients during tests and surgeries need something to do and may not have remembered to bring their electronic device or may have been interested in a different one and be prompted to buy one now. That means demand is likely to exist.

Best Buy is known for their sales and being able to get reasonable deals. If they change their pricing strategy for hospitals and people realize when they leave that they paid extra, it will do damage to their overall reputation and could cause a loss of sales overall. Great strategy but it depends upon how they implement it.

Cathy Hotka
Guest
10 years 4 months ago

This could be a genius idea. Hospitals have a captive audience, and relatives who want to show their love. This could be an ideal place to sell iPods, music, and other entertainment products. But would a self-service machine be more cost-effective?

Benjamin Smith
Guest
Benjamin Smith
10 years 4 months ago

Before I read the details I immediately thought the electronics vending machines from Zoom Systems could be the answer. However the current machines, even with tweaked assortment might not be viable from a cost/return perspective. I imagine Zoom Systems is looking into a business model for a line of machines with a lower up-front investment outlay that could work in smaller size, lower traffic/volume environments like hospital gift shops, college campuses/bookstores.

If the location can justify the business case, it’s a win-win. The hospital store gets the association / differentiation with Best Buy, they offer their customers convenience (at a premium), and Best Buy gets some incremental branding and volume.

I don’t know how important the brand name is on the machine (Macy’s e-spot machines with consumer electronics have done well also). I wonder if Zoom Systems could do this without the aid of a retail brand?

Tim Henderson
Guest
Tim Henderson
10 years 4 months ago

I’d definitely like this idea better if it were a retailer that could offer a variety of merchandise beyond consumer electronics, like apparel, books, etc. That said, it’s a worthy concept and I hope Best Buy succeeds — and that other merchants begin to think in similarly creative ways about reaching consumers. Today’s consumers live busy lives and they access brands in a variety of ways outside the traditional store. Brands need to think more like Best Buy and make their goods available in new ways to new demos.

Dave Wendland
Guest
10 years 4 months ago

Kind of makes me want to spend some time in a hospital … or at least assist in making the “experience” more than just healing the body.

Electronics in this setting can provide patients (and loved ones) rehabilitative support and mind/body/spirit comfort — while representing a tremendous untapped revenue opportunity for Best Buy.

I love it when organizations literally think outside the box!

Jeff Hall
Guest
10 years 4 months ago

I agree with Cathy. The strategy has merit, as you have a captive customer base with a reasonably strong desire for entertainment-related electronics. For anyone who has spent time in a hospital setting, either as patient or family caregiver, the idea of these types of products will be viewed as welcome relief. I’d be interested in learning more on the reasoning to not use the Best Buy branded multi-product vending machines.

Rick Myers
Guest
Rick Myers
10 years 4 months ago

Best Buy has a few items that could possibly work in a hospital. Things like batteries, headphones, phone cards, memory cards, small cameras, the latest CDs, etc. Most of that stuff has low profit margins on it. So, they would have to mark it up higher to make a profit. I assume the space they garner would be leased to them. And I think people paying for items in a hospital would generally be okay with the prices being somewhat higher there. A thing to consider would be the nearest Walmart or other source for such product.

Anne Bieler
Guest
Anne Bieler
10 years 4 months ago

This is an opportunity for Best Buy, with motivated shoppers within reach. Waiting is the number one activity in hospitals, or so it seems, so at the right location this could be a winner. Thinking the basics to keep our phones and laptops going, gifts for patients – audio books, ebooks, etc. Mix and pricing have to suit the location, but it should make sense for selected sites.

Another idea; how about a kiosk or something talking about the newer items and possibly an online catalog? Always takes time for some of us to “browse” the selections and consider options – here, some of the waiting population would much rather compare tablet options, etc, than read what’s available in the waiting areas.

George Whalin
Guest
George Whalin
10 years 4 months ago

There may very well be a marketplace in hospital gift shops for small electronics. But there are some challenges. The first is that many hospital gift shops are operated by workers who are volunteers. With a limited number of people to work in the shops they often are open for business a very limited number of hours. Since a high percentage of these people are senior citizens they might have a difficult time learning about and explaining the technical features of consumer electronics. The shops are also quite small so the amount of space that can be dedicated to a new category is also quite limited.

The pricing issue is likely a non-issue since these shops generally are only able to sell inexpensive merchandise. I believe Best Buy would do much better in negotiating a deal with hospitals to install the same kind of self-service kiosks as they currently have in some airports.

Phil Rubin
Guest
10 years 4 months ago

While hospitals are likely a viable new venue for Best Buy, I question the impact it might have on its $50 billion sales number. The vending machine approach it’s taken in airports is much more interesting, as would be other venues where a traditional retail footprint isn’t warranted.

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