As a company, we have a long history of adding new products to our assortment, dating back over 40 years to the evolution of “Sound of Music” into what is now Best Buy. We used to sell mainly stereo speakers if you can believe it and now we obviously sell a whole lot more stuff. Most great retailers expand product assortments over time, I think because as they get good at filling customer needs, satisfied customers want more from their favorite retailers. I like Apple and as they enter new categories, I try them out and happily wait for the next new launch.
At Best Buy, we are very focused on category expansion given the dynamic nature of today’s marketplace. Following decades in which we were primarily engaged in hand-to-hand combat with CE specialty retailers, we’re facing competitors that include retail heavyweights with highly diverse product portfolios like Wal-Mart, Amazon, and Costco. Given that we expect there to be continued pressure on many of our legacy products, we’re looking into how we can fulfill broader customer needs and expand what we offer. (As yet another example of why this is so important, think of the radical changes in the music industry over the past 10 years and the amount of space in our stores dedicated to physical media.) In addition, we fundamentally believe that the strength of the Best Buy value proposition and focus on the customer will enable us to expand beyond today’s relatively narrow definition of consumer electronics. We also know entering new categories can be a challenging and potentially risky task.
To take advantage of the opportunity, we’re fundamentally changing how we approach this work with a stronger focus on our customer and our brand. Since no single new category is going to fulfill all our growth objectives, we’re building a robust portfolio anchored in customer needs, the brand, and of course, financial objectives. One of the areas that I am most excited about is a growth platform we’re calling “Learn.Play.Enjoy” that has multiple new category opportunities. This growth platform is rooted in core customer needs like enrichment and learning and has a strong Best Buy brand fit. Our teams are also closely examining the competitive landscape to uncover related, brand-right new categories offered by retailers that are potentially vulnerable given the current environment. Finally, we believe sequencing will be critical for new categories. Just like Nike introduced golf shoes long before they started selling golf clubs, we need to properly sequence these opportunities to take full advantage of the broader customer need over a multi-year period.
We’re aiming to get many of the “Learn.Play.Enjoy” categories online and in-store during the course of the next year. As with any new product launch, I’m sure there will be fits and starts. But I also know that there has never been a more important time for us to aggressively pursue this work. Perhaps most importantly, I’m excited how we’re approaching this opportunity with a heavy focus on the brand and meeting more of our customers’ needs. Would be very interested in your thoughts on our overall approach and the challenges of new categories.
Barry,
Thanks for seeking feedback on this post about Category Expansion at BBY. As you know, I used to be one of the company’s ‘explorers’ for new categories, items and services. I thought to try here to stretch my personal definition of ‘Category’ beyond simply offerings that Best Buy would present me and I would transact to acquire them. The first words that popped to mind were ‘time’ and ‘smart’.
This got me to thinking about how Best Buy could help me save time and be smarter about the topics of most interest to me beyond what the online world offers me, especially Google, Facebook, LinkedIn, and Twitter. Obviously, there are 10s of millions of customers with devices purchased at Best Buy searching, seeking and viewing the stuff that matters most to them right now. But, what are they missing that constitutes either/or better stuff, or time-savings in getting at the best stuff?
Are there ways Best Buy could provide the brains, tools & dashboards to optimize customers’ digital lives, and make money at it? I actually think you can because unlike the big online players mentioned above, you have stores, Blue Shirts and millions of boxes moving in to customers’ homes that can include unique out-of-the-box helping ‘hands’.
Obviously, there are no easy answers to how to do this, pay for this, and make money at this, but it just feels to me like your 10s of millions of actual customer ‘touchpoints’ should form a platform for innovation that online-only companies can’t match.
Here’s perhaps one relevant story. I’ve found that most Twitter newbies are skeptical and/or confused about its value. When they read about 140 character updates, and then view a few, typically what they remember is the mundane. Tweets like: Waiting for my latte at Starbucks.” Obviously, with this first impression, it’s a leap to invest the time to begin to understand the value of the real-time conversational stream, especially the time-smart discoveries you can make from the smart folks you follow. But, when a real person takes the time to bring you around to understanding Twitter, the value quickly emerges. I know a social media consultant with enough followers that when she has an initial media with a client, she simply asks via Twitter her Followers to say hello to this newbie, and invariably a real-time, and most often valuable conversation of sharing insights and discoveries within the newbie’s industry or interests begins within minutes.
Now, of course Best Buy Blue Shirts could not be in-store Twitter coaches like this, or make much money at it even if they tried, but it leads me to think about the concept of the power of this personal touch as a Category. I’m optimistic that there may be ways for Best Buy stores, people and technology dashboards you create to be the Time-Smart brand for our emerging digital society.
As someone who enjoys a tiny propeller on my beanie (vs. a big one like a real geek), I’m the go-to-guy for friends, family and colleagues for all sorts of “educational” discussions before buying, using an alternative technology like Skype, Flickr or some other hosted application, or what gear to buy in order to podcast (and the process), break into social media and so forth.
As the always-on, always-connected participative nature of the ‘net accelerates, the volume of choices in hardware, software, and hosted applications are going to continue to overwhelm all but the most technoweenie among us.
THAT is the gignormous opportunity I *think* you’re describing with “Learn.Play.Enjoy.” If so, you’re on to an empowerment path that will enable people to cross-sell and upsell themselves as they learn and become more capable at everything from their own home theater experience to networking to computing to video editing. If they don’t know it exists or what benefit some technology will deliver, what they already have is good enough.
This also extends to small business (an initiative I’m aware you’re moving toward) and their needs are, in some ways, more acute.
I like how you’re running a “trial balloon” with this post in order to gain input. What happens, however, when Best Buy delivers some sort of online/offline learning strategy that is positioned as being the be-all, end-all, expert one? Will there be a crowdsourcing aspect to it so others can help mold, shape and guide the content and delivery of it?
I really like how you guys are taking risks…even in this environment (which is probably even MORE important than ever).
Sometimes it is not necessarily new categories, but the re-packaging of the products that you have. If you think about all the new small businesses, consultants, etc that are now in the market, setting up offices either at home or finding office space, they are disperately in need of all the necessary hardware, software, copiers, websites and even small refrig’s for the office!
Being a small business owner and taking that leap into starting a business after 9/11 (much like the current economic environment) there are several issues getting all of this set up.
First, many of these new business owners and consultants will be coming from large companies where there was an IT department that took care of all their issues. There was a finance department that took care of any financial issues, they didn’t have to worry about money.
Now they are on their own. They are busy trying to generate business and do not have time to “learn” about how to set all this up. They want to go thru a menu or better yet, look at a package A, B or C and buy the package.
The other part to this…..CASH. As a small business owner or consultant, CASH is KING. This is an opportunity to sell this package with a fixed monthly payment.
If this is set up as a lease, you then set up the entire idea of trading out equipment, providing upgrades, etc.
You could even look within the recent group that has was part of the voluntary seperation to see what their needs are/will be! Pool a group of small business owners, like you have the WOLF group and I think you could learn that their is amazing opportunity using the “things” you already have, just packaging and selling in a different way.
Bring back playtime! Loving the idea of moving forward into new categories by reaching back to what really engages us. And success of a new category, particularly in retail, seems to rest on our ability to engage the consumer in just enough playtime, just enough theater, to get beyond the simple facts that BBY has never sold [insert widget/service here] before and that buying [same widget/service] at BBY seems a little bit odd. Playing with objects allows us to see them in a new way, to recontextualize. The same theory probably applies to playing with our sense of what “works” and what “doesn’t” in the retail space.
Barry – As a consumer advocate I must say I’m pretty disgusted about how one of your customers was treated in Georgia, and sadly, this story is all too typical of a myriad of consumer postings about Best Buy around the internet. You may call this customer focus, I call it abuse of customers.
http://consumerist.com/5164262/best-buy-sells-busted-cam-as-new-blames-you-oops-employee-pix
Store #519 in Douglasville, Georgia
What are you doing about it, why should people trust your stores with this kind of thing going on?
I agree with Scott K on the repackaging of current products. It’s one thing to sell to small business, it’s another to target the legions of cubicle jockeys who operate within a large corporate mainframe. Just look at the popularity of the workspaces group started by Lifehacker on Flickr. The average office worker is always trying to (safely) assert their identity & forward their careers. How can BBY be a part of that?
Home theater systems are often set up to show people the immersive experience they could have in their own home. Imagine setting up a cubicle example that’s outfitted with Best Buy products. It needs to be 2 parts aspirational, 1 part practical. The better work environment would make you more productive & happy (helping you to keep your current job in this recession). I’m thinking PDAs or smart phones, digital clocks, electronic notebooks, digital picture frames, headphones/ipods for industry podcast/music to keep you productive (could do portable satellite radio as well), mini-fridge for healthy foods, GPS unit w/ traffic updates to get you to work on time, USB drives…all items that fit within a greater corporate environment. Then, of course, the other items like a laptop, printer, scanner, etc could relate ideas for the new wave of small businesses/consultants working from their new home offices.
I sense that Best Buy is usually targeting the aspirational part of my home life, home theater to family videos, etc. However, I spend 8+ hours a day in a barren cubicle, especially in this day & age when I want to keep my job. Now if only I had a smart phone that would help me keep track of everything from the latest grocery deals to important work emails…
Hello Mr. Barry. Learn.Play and Enjoy is an excellent category to be applied the largest generation of Hispanics where your Company can be the leader and take advantage of this multimillion dollar opportunity. How is your Company approaching this community in the different sectors such as in the Southeast that has the larger increse in Hispanic population. Would like to know your interest in marketing to this community.
Hey Barry. Since we both work for the same company, I just wanted to say, one great example of the Learn.Play.Enjoy growth plan would be Best Buy’s new venture into Musical Instruments (which is the dept I work for). Most customers come into the Musical Instruments deptarment thinking Best Buy is just copying Guitar Center, but are surprised to see we offer lessons and other services. Best Buy has empowered myself and my coworkers with the power to teach our customers how to play an instrument. Having such an influence on individuals who want to pick up an instrument and learn how to play has actually not only had an effect on the customer, but myself. I have customers who are well versed and fully experienced with guitars, pianos, ect., but some of them even look to us to teach their family members or friends. So we teach them for the time they paid, but we always invite them back to jam along with us, or better yet record what they have learned (this hasn’t happened at our store yet, but we are getting there). We ensure that they have a good time in our department. Its about the relationship and the trust that is developed in the store, and can not be replicated online (for now). Hopefully this experience can be further expanded to the other departments, and have our customers know that we Blue Shirts are not just Sales People, but Blue Shirts that influence and help our customers further understand the products they purchase, and what it can do for them.
Hello Barry: We are very fun of your Learn.Paly.Enjoy growth plan. This program can be use to promote many other family programs that can greatly increase sales and loyalty with your Hispanic Community which is marketing segment that we specialize. Since Hispanics are so fun of Music, musical instruments, movies and all type of electronics, you can expand the program to establish inSpanish:
1. Mothers Days Promotion
2. Father Days Promotion
3. Sprint Fest at Best Buy
4. B-Days at Best Buy
5. Music estravanganza
Ect. Please let me know how we can help you with these programs at the Development or Implementation phase.
Barry;
Long time no see! You article reminded me of the time (back in the day) when we looked at the possibility of Best Buy acquiring Guitar Center. At the time, we decided the market was too thin to get our money back out of such a large investment. This new approach, however, makes more sense. As technology becomes a commodity, it is the original creativity that comes from using the technology tools which adds the value. The more BBY connects to creative output (versus just thinks you plug in the wall), the more value it can add. You might enjoy my strategy blog at http://planninga-from-nanninga.blogspot.com.
Gerald:
Appreciate the comments and the tip to look at your blog. Will take a look at it. Hope you are well.
Very interesting post Mr. Judge. In what way do you plan to apply the Nike golf club and glof show model to the Learn.Play.Enjoy?