The year is 2013. You walk into a Sears for a new washer and dryer or Best Buy for a new television. Let’s say you are not inclined to search the internet to identify a product line you feel comfortable with as well as a subsequent location to purchase it, all prior to walking into a physical store. I would argue that most Americans research every purchase over $100 today but I don’t have any good research to reference, so let’s ignore it for now.
So you haven’t researched your purchase ahead of time and you find the washer, television, jewelry, what have you… You find the one that you want.
Now, you pull your phone out and type the make and model into it. A list of sources to purchase the product, relevant to your location comes up in seconds. Not a stretch from a technology standpoint i’m sure you’ll agree. In three years, we’ll all have internet on our phones. Even if you disagree, call it five or ten years Eventually our cell phones will become our primary internet devices and you are going to check price every time.
It’s too easy. We’ll have to do check if all it takes is a few punched keys.
How does a big box retailer compete on price? They don’t.
Those who are currently profiting from these big box retailers existence will likely argue that their service, convenience or quick delivery and installation will save them. I disagree.
Like it or not, with the exception of a few verticals like small consumer goods, convenience stores, and dining, the internet changes industries in such a way that they need to rethink their business models completely.
What does Best Buy look like in ten years?
It probably looks like the gaming retailer, EB Games does today. Small locations within shopping plaza’s and malls, staffed with fervent advocates who work and play with the local community to buy, sell and trade goods. It looks like MAC, which positions themselves wisely as advocates for beauty with salon type locations where women can come get their make up done and talk fashions.
In the consumer electronics world, nobody is doing this better then Apple. Beautiful stores inspired by their products design, staffed by fellow Apple enthusiasts, backed up by the advertising budget you only find in the world of autos, insurance, and pharmaceuticals today.
This is the optimal Best Buy in 2020 in my opinion:
1. 1500 +/- square foot locations across the US in major markets.
2. Staff with stand up terminals to their website and well informed electronics advocates along with a member of the Geek Squad for tech support.
3. Large screens on the wall demo what product the terminal at that time, showcasing to passers-by what their neighbors are about to buy.
4. Holding regular events with the involvement of the local community to showcase the cool ways the products they represent are being used. Things like music mash-ups, short films, photography lessons, etc.
5. Back up your locations with aggressive brand advertising focused on your website and positioning your store as a local resource. Like libraries were for books, they’ll be for consumer electronics.
The recently bankrupt Circuit City had the right idea with the last ditch attempt at changing their model to "The City". The only problem. Too much overhead to sustain the transformation and realize any measured results to present to stockholders.
Big box retailers like Best Buy should start today with a “Best Buy Express”. Take any/all of the stores you have planned and scrap them. Instead, go with the Burger King model of expansion. Follow your competitors locations with cheaper locations in the immediate radius. I fully understand the power of big beautiful stores over consumers and their ability to force out local retailers, but this model is simply not sustainable the more and more of our lives we spend online.
Don’t make the mistake Blockbuster did and wait until somebody has figured this out and is forcing you to change as it was with Netflix. Blockbuster has a legitimately better offering in that they allow you to return DVD’s to the store or by mail and pick up them up in the store without an additional charge. They had the market exposure and the ability to produce the better product. They saw Netflix as a fly not worth squatting and now they are drowning.
Now, some will say and they would be right, that when people go to buy electronics, they want to take it home on the spot. I don’t argue that and there is nothing to say you can’t keep a limited stock on site but the reality is, if people have to wait till the next day or the day after, they will. Particularly when the alternative is getting in the car, traveling to a competitor they have no loyalty to and than checking the price on their phone only to find out you have the same thing 20% cheaper. Which you can do because you don’t have the overhead.
The successful sale of Geek Squad to Best Buy is an indication of the opportunities to view these retailers as a platform to create products and services for them and help them better serve their customers. Not just in the initial sale, but over the years. Creating advocacy and supporting the same in order to do your part in the making of a lifetime customer for your retailer parent. That is what is attractive to these brands and they have the budget and network to support you.
Here is the formula give or take:
1. How do I help Best Buy or a Sears serve their customer now and in the long term?
2. Now that I have a concept, what is the minimum expense I can go into to prove this will be something their prospects and customers will value? (MVP)
3. Show viability with real market data and then simply take it to the company in a compelling way. Suggest you work together to test it in a few of their markets and then roll it out nationally.
A quick idea of a model that would be of great value, is a national network of installers on a platform that makes it easy for customers to provide detailed feedback on their experience and incentives them to do so.
How about an SMS application and a database of opted in prospects broken down by location that can be leveraged to promote flash sales? The possibilities really are endless. As these industries evolve, so do the opportunities.
We’ll be posting more about this as time goes on…