Will Americans invite Best Buy into their backyards?

Discussion
Photo: Best Buy
Jun 18, 2021

Best Buy has been among the biggest beneficiaries of the stay-at-home trend that developed since the novel coronavirus pandemic broke out in 2020. The retailer’s leadership believes that Americans will stick with the behavior even as the threat from COVID-19 decreases and, as per its announcement earlier this week, is moving into product categories (grills, patio furniture and lawn equipment) not normally associated with a consumer electronics chain.

Why should consumers purchase grills from Best Buy rather than the stores where they have typically bought them? The retailer claims that its “expertise in delivery and on-site assembly” puts it in the position of ensuring “a great experience throughout the entire process” for its customers. The chain will include free delivery and on-site assembly of select grills when customers purchase $100 or more of grilling accessories. It is also offering to haul away old grills for $29.99 during its stops at customers’ homes.

Best Buy CEO Corie Barry said on the retailer’s first quarter earnings call that she and her team expect Americans “to be living some hybrid life for the foreseeable future” with a large percentage of daily activities, including work, education and entertainment, taking place at home. She said that there is “real demand for the continued innovation” and Best Buy is focused on delivering the products and services that meet these consumer needs.

The consumer electronics giant’s move into outdoor lifestyle categories may be seen by some as traveling outside its lane. Does Best Buy’s move reflect that it is somehow losing focus and straying from its core competency or does it represent a logical extension of its business to drive greater revenues, market share and profitability?

The retail industry has plenty of examples of companies moving into new product categories, with some achieving success and others falling short.

Amazon.com has come a long way from its bookselling days and today offers the greatest selection of merchandise under the sun.

J.C. Penney, under former CEO Marvin Ellison, moved into the major appliance category only to get out of the business shortly after his departure to Lowe’s.

Mr. Ellison has taken a similar approach at the home improvement retailer. Lowe’s sold products such as air hockey tables, bedding, exercise equipment, small appliances and other products to its customers during the Christmas holiday season.

DISCUSSION QUESTIONS: Is Best Buy’s push into outdoor living products a keen business move or does it represent a loss of strategic focus? What are the keys to success for retailers moving into new product categories currently occupied by strong competitors?

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"Best Buy can evolve into a version of what the hard goods side of Sears could have evolved into."

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19 Comments on "Will Americans invite Best Buy into their backyards?"


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Mel Kleiman
BrainTrust

Why is Best Buy letting a possibly good idea distract them from their core business? This is just not a great idea.

Richard Hernandez
BrainTrust

I remember long ago, Best Buy was in categories that sat on the shelf and gathered dust. Eventually, they remerchandised and these categories were eliminated. We have come full circle now. The outdoor products might work if the assortment added can be run by your mobile device – I can see that tie-in being relevant. For me, Best Buy wouldn’t be the first place I would look for a grill or patio umbrella.

Neil Saunders
BrainTrust

As a major beneficiary from the pandemic, Best Buy needs to find ways of maintaining sales levels – and it is unlikely this will come from core categories. Venturing into adjacent areas is fine and I don’t think it will do any harm, but it is a little odd. And, honestly, unless Best Buy is selling amazing products that are not available elsewhere or is offering services that are unique, it will not be the first port of call for consumers looking for these items. I would much prefer it to push on more logical areas like health technologies.

DeAnn Campbell
BrainTrust

Considering its importance to our country’s culture, outdoor grilling is an incredibly underserved shopping experience. The typical DIY BBQ display is devoid of experience or relevant product information, doesn’t show the product in context of its use, and places accessory products on a far removed aisle. Best Buy is smart to grab this opportunity to give consumers a better buying experience.

Scott Norris
Guest

DeAnn makes a good point. If we’ve accepted buying grilling equipment at Home Depot, why wouldn’t we accept it at Best Buy? The newer ones with app-enabled sensors should be seen in the context of a home network.

Jeff Sward
BrainTrust

Best Buy can evolve into a version of what the hard goods side of Sears could have evolved into. It might have an electronics foundation, but to me they have demonstrated solid product curation and exemplary customer service. That’s a winning combination that can take them well into serving the needs of the modern home.

Lisa Goller
BrainTrust

Best Buy is wise to expand its assortment in the in-demand home category.

Last year, 78 percent of consumers upgraded their outdoor living space. Expanding into outdoor goods will grow Best Buy’s top line as a one-stop home shop.

To successfully enter new categories, retailers need distinct, innovative products aligned with consumer trends. They also need to continuously monitor their rivals’ moves to stay competitive and relevant.

Rich Kizer
BrainTrust

It’s not a loss of focus for Best Buy, but an attempt at building a larger position in the customer’s minds to consider Best Buy as a source for outdoor products, complete with delivery, assembly, etc. But all their major competitors in this category have so deeply sunk their competitive stance in, that I think it will be really hard to unseat their competitors’ positioning for the minds of their customers. About the only way I see it happening is better service tactics and lower pricing of their offerings. And I am sure that no one at Best Buy wants a margin hit.

Mohamed Amer
BrainTrust

Think of this as Best Buy extending the socialization and entertainment function of the traditional living or family room to the backyard. Outdoor construction projects and sales of patio furniture have extended the living spaces beyond the four walls. Best Buy is making an opportunistic play on a strong consumer lifestyle trend.

Bob Phibbs
BrainTrust

Adding lines is easy but actually selling the merch takes work. Best Buy made news about reducing the workforce by 5,000 and retraining associates to hand-deliver orders. I think there could be hubris here that they can do more with less. There are plenty of places to buy such things and with supply chain issues, I don’t know what they can provide that other more established players can’t already do.

Shep Hyken
BrainTrust

If I go to Best Buy, I can buy a fridge, microwave, stove, etc. So, why not a BBQ pit? Yes, outdoor living products is its own category, but when you already sell what Best Buy sells for the home, I see this as more of an extension of an existing category.

Thomas Paulson
Guest

$1200 average ticket x 34 percent gross margin = ~$400 gross profits + customer engagement + customer acquisition + consumer/customer data – $150 in labor, delivery, insurance, disposal, etc. = a pretty darn good opportunity if it can scale.

I’m not sure they can find enough workers to provide a flawless consumer experience at scale in the current labor market.

Steve Montgomery
BrainTrust

The issue for Best Buy is how to maintain the YOY sales gains it achieved from the move to home offices and a greater focus on other home goods. The move to grills, etc. may seem logical but it is a sizable departure from their traditional assortment.

The services they tout for grills are something that most retailers who sell them already offer. Definitely not a point of differentiation. The additional items may be worth a try, but I don’t see them as something that will generate the level of increased sales Best Buy seeks.

Trevor Sumner
BrainTrust

It’s hard for me to see the category transition into grills, where the perceived expertise and shopper is different. It’s also a bulky item that will require a lot of display room for multiple models even as Best Buy is reducing floor space for showrooms. Demonstrations? Nope. No outdoor space. Will they make room for accessories like grill tools, charcoal, smoke chips, grill attachments (ribs, veggies, etc), gas? Seems like a slippery slope that they aren’t able to deliver on for a differentiated category experience.

Richard J. George, Ph.D.
BrainTrust

The question for Best Buy or any retailer or brand is what business is it in? For Best Buy it appears to have a strong perception that it is in the business of “expertise in delivery and on-site assembly.” If this is true, the kinds of items it is extending to make good strategic sense.

Patricia Vekich Waldron
Staff

I’ve been a BBY fan for years, watching them evolve and thrive. However, after buying a new entertainment system from them and now not getting promised post-sale services (they re-orged Magnolia division presumably to resource the new lines), I’m not considering them for future purchases of any kind.

Absolutely retailers need to adapt to meet market needs and growth goals, but without abandoning core business and customers.

James Tenser
BrainTrust

I see Best Buy’s intent to expand its offering to encompass outdoor appliances and electronics as entirely consistent with its core offering of indoor appliances and electronics.

Backyard living rooms are a greatly desired home improvement these days — often incorporating flat screens and sound systems along with grilling, kitchen, fire features, and seating.

If Best Buy can provide high quality planning, installation and troubleshooting services for outdoor spaces, it will expand its appeal and score well with this strategy.

Rachelle King
BrainTrust

The pandemic has elevated the idea that Best Buy is a key provider for home entertainment solutions; not just electronics. Grills and patio furniture are natural extensions of home entertainment, especially heading into summer. While many are still home or entering a hybrid home/work model soon; these are relevant home entertainment categories, products are seasonally relevant and consumer behavior is being redefined. They are likely not going to get a better opportunity than this for expansion.

Key will be to ensure they do not compromise the equity they have in electronics; not just from a resource/expertise stand point but also from an in-store experience stand point.

John Orr
BrainTrust

Absolutely a great move. It is about service levels and product knowledge where BBY has excelled. Initial thought was that when you are outside, why diminish it with a focus on television when you could enjoy the sounds and sights of the outdoors? But BBY’s shift in thinking to support the outdoors with service levels we cannot get today — outstanding.

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Braintrust
"Best Buy can evolve into a version of what the hard goods side of Sears could have evolved into."

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