Will Best Buy’s golden years strategy deliver long-term success?
While most retailers seem to be obsessed with finding ways to attract younger consumers into their stores and onto their websites to shop, others such as Best Buy see business opportunities in catering to the needs of the nation’s senior citizens.
The consumer electronics retailer’s Assured Living program, which launched last year, is geared to meeting the needs of the elderly. Best Buy offers in-home consultations to match technology to a given customer’s situation and then employs its Geek Squad to do the installation. The goal of the program is to provide older customers with tools such as medical alert systems designed to protect their health.
Best Buy’s recent acquisition of GreatCall, maker of the medical alert devices and Jitterbug cell phones designed for senior citizens, is a clear example of its commitment to this market segment. GreatCall’s range of products and services has helped the company growing its subscriber base to more than 900,000 people. GreatCall generates more than $300 million in annual revenues.
When the deal was announced in August, Best Buy pointed to statistics showing that roughly 50 million Americans are over the age of 65 today, with that number expected to increase 50 percent over the next 20 years.
“We know technology can improve the quality of life of the aging population and those who care for them,” said Hubert Joly, chairman and CEO of Best Buy. “Now, we have a great opportunity to serve the needs of these customers by combining GreatCall’s expertise with Best Buy’s unique merchandising, marketing, sales and services capabilities.”
Being able to offer services in addition to products is key to Best Buy’s strategy, Sam Glick, a partner in the health and sciences practice of Oliver Wyman told CNN. Assured Living and GreatCall “provide key services that can’t be disrupted in a cardboard box,” he said.
Discussion Questions
DISCUSSION QUESTIONS: How do you expect Best Buy’s senior focus to affect its results over the long-term? What rivals are most likely to challenge Best Buy for this market in the years to come?
Poll
BrainTrust
I like this as a long-term play for Best Buy. Technology is and will continue to play an increasingly important role in enabling seniors to maintain their independence and provide family/care-givers peace-of-mind. The recent acquisition of GreatCall and future initiatives positions Best Buy well as the trusted provider for this large, growing and underserved market.
Future success requires more than sales today, it requires relationships with customers. Best Buy’s senior focus is golden for several reasons. First the older age segment is still booming. The products like GreatCall are not just gadgets, they provide much needed safety and security. Best Buy’s Geek Squad is the perfect compliment that makes the technology work in people’s homes and lives. Instead of searching for new product categories to sell, retailers need to find more ways to help customers buy solutions for their lives. Best Buy has done that and has created long term potential not just with today’s seniors, but with their children who will need similar home solutions as they age.
This makes Best Buy the “go to” solution provider for whole market segment that is NOT tech savvy, but will increasingly need tech solutions in their life. In-store, in-home, but maybe most important — in person. Amazon can’t deliver that in a box.
Marginally! Although the senior sector is large, it is difficult to say what percentage of that population segment is interested enough to want to be helped, which portion doesn’t need any help and which portion doesn’t want to be helped. On a long-term basis it’s a good strategy but, based on acceptance, the impact on sales is going to be minimal.
Best Buy is wise to recognize the needs of the senior citizen market and the opportunities they offer for more business. Technology changes rapidly and the older we are, the harder it is to keep up. The seniors are the ones that usually have more money than the younger generations. However, why should a senior purchase a 60-inch 4K TV when they don’t know how to program it? Now with Best Buy’s assistance, it’s no longer a problem.
Moreover, beyond consumer electronics, many items can appeal to seniors including medical devices. The list goes on and on with how Best Buy can assist seniors. All retailers should recognize the importance of the older generation and be thinking of options to offer such as larger typeface on websites and apps and better methods for assistance. Let’s start with a senior citizen retail helpline that has a human on the phone rather than a computer — older people would definitely prefer that.
The aging Boomer and senior segments have a real need for tech support and relationships in addition to a new set of products. Best Buy is making a strategic investment in a market that knows, trusts and will become grateful brand ambassadors!
It all started with seniors discovering they could keep communication lines open with their grandchildren. That is when they found that their fears of technology were unfounded. Now, with technology keeping us all living large, and creating longer life expectancies, Best Buy is catering to this incredible growing pool of customers. Great Move.
It is the grandchildren who put them online to begin with. It is also the grandchildren who solve their problems when they can’t.
I like this “blue ocean” strategy (i.e.: where no one else plays), I just hope Best Buy realizes that the older generation will be close to as tech savvy as their younger counterparts the more we move down the silicon road. Example: My mom thinks Echo is the best thing that ever happened to her and is constantly talking to it (her?) and buying things as well. Yikes.
This is a sound strategy that is aligned with market realities. From our own research, we know that smart technology that allows elderly people to lead more independent lives is a big growth area. And with an aging population profile, demand for such products will only increase. As a trusted brand, Best Buy can carve out a real stake in this market.
I like that you say “elderly population,” Neil. There are actually two segments to the Baby Boomers: Classic Boomers who are turning 72 and hardly elderly, and Generation Jones, many of whom are still in their 50s.
As a Boomer it’s tough to stomach all the “Baby Boomers are ready for the home” comments. We have deep pockets and are perfectly capable consumers. Too many people forget that.
I am referring to the elderly in our research (defined as 75+) and do not mean it in a pejorative way. We have found they are using technology more to lead the independent lives they desire, including things like smart speakers and screens to stay in touch with relatives. That’s far from being incapable, it shows they love life and want to embrace new things to live it to the max! Best Buy has been smart enough to recognize this.
Over the long-term I think it’s a great move. Not only are there a lot of Boomers out there who — while not quite enfeebled yet — could use a little tech support and digital lifestyle enhancement, there are a lot of Gen Xers and Early Millennials (the folks we used to call Gen Y until some savvy marketer figured out how to engineer a second bite of the cohort apple) who are concerned for their parents’, and/or grandparents’ safety. This kind of program appeals to them too, not only because of the safety issue, but because it frees them up from physically checking in on Mom, Dad and the grandparents all the time. Beyond that, the smart play for Best Buy here would be to hire some social scientists and begin modeling how cohorts’ buying behaviors change as they age — let’s call it gerontological retailing. With any luck everyone — including those adorable Gen Z kids we are all so enthralled with — eventually gets old. By understanding the needs of shoppers as they age Best Buy could be in an excellent position for generations. After all — aging isn’t just for Boomers anymore.
Based on the brief explanation of Best Buy’s intention with the “elderly,” I am disappointed by the implication that those over 65 are in need only of emergency call buttons and helpful ways to “keep their independence.” Sure some older folks need help to sustain themselves, but “Best Buy” doesn’t come first to mind for them.
This is NOT your parents’ elderly population. Come on retail, wake up and move into the 21st century! People well over 65 are starting businesses, running marathons, writing music and books, inventing amazing things. Right now I’m in the process of acquiring remarkable technology from some brilliant guys averaging well over 80 years. The oldest still cycles every day on a $7,000 bike. They are not sitting drooling in the sunroom waiting for Tuesday night Bingo.
Creating technology that is intuitive and simple to use with applications that people actually use and not just included because some programmer can, will benefit everyone. Twenty-somethings get just as frustrated with technology as seventy- and eighty-somethings. And who wouldn’t rather talk to a person than spend an hour clicking their way to no resolution?
If Best Buy or retail generally gets caught up in condescension toward this market sector this “innovation” won’t last long.
Ian,
I totally agree, BUT I think they have to start somewhere. The real key to the program’s long-term success will be how fast they migrate from the “old is enfeebled,” model, which is perhaps more applicable to Boomers’ parents than it is to Boomers, to the notion of concierge tech support. For years, well decades really, I have thought that retailers were missing an opportunity by not approaching aging populations in the same way that Sam Walton approached low-income shoppers — figuring out what they needed that they weren’t being offered and giving it to them with a level of respect they often didn’t receive.
We all get old, and generations age in different ways. In the 1950s, for example, most 70 year old men were … well … dead. Today they may be on their fourth wife, third family and seventh career. And the story is even more robust for women. In a society that revolves around an almost fetishized vision of female youth and beauty, older women need retailers who take them seriously as viable and complete human beings. And since women still outlive men, their viability as a target market is even greater than those of their male cohort peers.
So I salute Best Buy for taking a first step, even if it is a clumsy stumble. And as I suggested in my comments above, they may be in a position to become the world’s first serious experts on how aging impacts retail. Sure there will be a lot of missteps along the way — but everyone ages, except for you and I of course.
Well said, Ian!
I agree with you, Ian.
I wonder if Best Buy has thought about targeting this strategy at assisted living and nursing homes? Obviously the medical alert angle that the utilize for autonomous residents would be less of a need, but general tech retrofits could be a big play.
This area is booming and Geek Squad techs could potentially deal with one point of contact or at least service multiple families all at once. And resident’s talk — so they will want to get the latest and greatest that so and so has down the hall.
As my mom would say, “we are older longer than we are young.” I think this is a fantastic idea. However older generations don’t just need medical alert tools, they need technology lessons. Best Buy’s needs to offer in-home sessions on texting and video calling and sharing. Call it “Texting Tuesdays” if you want, but get our elderly up to speed with their kids and grandkids. Don’t leave our grand people in the Dark Ages. Let them be able to communicate with their families in real time. Send out high-school and college volunteers to senior places, etc. and ask all your customers if they would like some free text messaging lessons. Have in-store volunteers teaching texting and sharing pics with anyone who is interested. There is an entire world of elderly not so elder, that are missing out on today’s sharing because no one taught them how. Remember, no child left behind. How about, no parent left behind?
The Geek Squad subscription service and the Assured Living program are two tactics in what is becoming a very compelling strategy to deliver services, support, and products to an aging, but longer-living population. I think about witnessing my own grandparents in their 80s, and the needs for technology and electronics in the home intensifying from the iPod to a smart refrigerator in a very small window of time. These needs will only compound in years to come as technology infiltrates more of the home, and time-poor children aren’t readily available to assist.
The “senior community” can cover a wide brush stroke of years. The closer we are to the top number, the less we are going to be interested in tech support past what we already know. In many cases the desire to learn something new has passed. However, if we are at the lower number in years, the more we are willing to learn about today’s technology and how it can benefit us. So go for it Best Buy. Remember, those in their younger-than-senior years are going to be a senior one day. Don’t forget them now or they will forget you later.
As Baby Boomers enter the golden years, the advances in technology outpace the ability to stay current. We are not digital natives. Focusing on this commercially viable demographic will reap tremendous rewards for Best Buy from a technology perspective. But it’s not just technology. Seniors are staying in their homes much longer and this opens new potential for grocery — click and collect, safety enhancements, security, and telehealth. The advancement in sensors and the connected home will be driven by this demographic. Security companies should/could have a tremendous advantage to leverage their existing presence.
This Gen Xer would be very glad to pony up for a subscription to on-call/in-home tech support service for my in-laws. They don’t need monitoring services, but they have everyday needs like OS updates for their phones and desktops, router hardware replacement, computer health/backup checkups, and TV settings. Whether it’s Comcast/Xfinity or Best Buy, it needs to be someone I can trust and someone who can go to their house same-day or next-day, know the right questions to ask (and have a secure log of settings) and just get the job done (without Mom looking over my shoulder, making worried noises, and speculating on worst-case scenarios).
Sell it as peace of mind/monkey off my back for my generation!
The idea that services provide a stable barrier to competition is excellent, otherwise Best Buy is at the whim of the latest pile of chips in a box. So overall, this is a good strategy.
I’m disappointed, though, that the focus is on “aged and infirm” products. Truth is that across all age groups, much tech is far too complicated for a majority of consumers to integrate themselves.
There is a broader service opportunity helping people of all ages integrate these complexities. As a very simple example. We bought a Ring doorbell which we haven’t yet installed. Why? We asked the electrician to install it and they don’t have the tech ability to take the job on. We ask the tech folks to install it, they refuse to work with the wiring and the physical installation.
So, 18 months later I’ve tested it out without installation — yet it just sits in our kitchen. And it’s not that I’m tech naive. I started life as a programmer and worked with supercomputers and set up the first installation of a network of Apple II’s at General Dynamics.
Great move for Best Buy, and it extends a key factor that makes Best Buy special — their service focus. It’s not just about buying product. With Geek Squad, installations, and tech enablement, its business is heavily tied to peace of mind which can be a multi-billion dollar industry (insurance, anyone?). With security issues, broad product selection and the hassle of change, it’s a good play. Best Buy is expanding from luxury and entertainment to life-critical and well-being services. Notice I didn’t mention age — because it doesn’t matter. These are customers with needs, and there is no deficiency in tech adoption or embracing the best tech by this demographic.
This would seem to upend (or is it just give new meaning to) the phrase “life-long” customer, but I agree the demographics support the idea. That having been said, I was disappointed George’s piece didn’t discuss more their strategy(ies) beyond the obvious of purchasing a device maker; it seems like there is much more that a company could do.
I am a huge fan of this move and always appreciate brands who zig (go after boomers and senior citizens) when everyone else zags (go after millennials). The boomer generation may be getting passed up in numbers a tiny bit by millennials, but their purchasing power is somewhere in the 100X range. The baby boomer generation is the wealthiest in history and are still a inheriting massive amount of wealth from their parents.
Targeting this demo with a combination of products, services and real, human, in-person help is a great move — specifically in this category of technology and electronics where the pace is fast and everyone in this generation could use a little help.
In terms of rivals in this space for this target customer, the only viable one seems to be Amazon, but they lack (as of now) the people part of the process.