Best Buy offers a new way to engage higher-end customers..
The box looks familiar, but customers will find some shiny expensive toys inside.
At 45,000 square feet, Best Buy Co. Inc.'s new Connected Store in Richfield is still sizable, but there are some notable additions aimed to engage customers: a Genius Bar-like tech support center, employees with advice on pricey stoves, and rooms where home theater geeks can design their ultimate man caves.
"Technology is an amazing place to be right now for Best Buy," said Josh Will, a company vice president who oversees Connected Store development. "But it's still too hard for consumers to use. It's difficult to get a good understanding of what technology can do for you and more importantly how it can better your life. It's time that our shopping environment matches that expectation."
Connected Stores form the heart of Best Buy's strategy to reduce its square footage in favor of smaller stores that emphasize high-end service. Best Buy plans to close 50 big boxes across the country by the end of the year and open 100 smaller-format Best Buy Mobile and 50 Connected stores. The scaled-down concepts typically range from 30,000 to 45,000 square feet compared with 58,000 square feet for the traditional big box.
Best Buy, which is now testing Connected Stores in the Twin Cities and San Antonio, expects the format not only to retain the shoppers but to attract new customers, especially ones willing to go premium. In doing so, the company can offset some of the lost sales and profits from the traditional big boxes that will close.
"We spent 50 years getting some of the best locations and real estate across the United States and so we're investing in those stores," Will said. "We expect to get an equitable return on that investment."
Though generally praising the redesign, industry observers still question if the format can help the consumer electronics giant reverse its sales declines and regain momentum from the likes of Wal-Mart and Amazon. Or more specifically, if the Connected Store can help Best Buy erase the scourge of showrooming, the practice of consumers examining store merchandise and then making the purchase online on a competitor's site.
"Making the store look nicer is always good," said Laura Kennedy, an analyst with Kantar Retail consulting firm outside of Boston. "But it's still not Apple in the end."
There are some Apple-esque elements in the store. Start with the Geek Squad Solution Central in the middle of the store. Borrowed heavily from the Apple Store's popular Genius Bar, the center offers free tech support consultations and classes from Geek Squad agents. Customers can also purchase and activate their devices before they leave the store.
Will said the center can help establish customer loyalty by offering shoppers help with mobile devices that run on both Google's Android and Apple's iOS operating systems. Android now powers up 51 percent of the smartphone market while iOS controls 31 percent, according to ComScore.
Then there's the Magnolia Home Design Center. Inside mock-up rooms, Best Buy designers go beyond just flat-screen TV and sound system advice -- they show customers how to best configure those technologies for their homes.
Over at the Pacific Kitchen & Home section, consumers can ask employees how to create the ideal kitchen to fit their lifestyles, which may or may not include a $15,000 Viking refrigerator. Best Buy is clearly trying to trade up its customer base, Kennedy of Kantar said.
"When you ask for professional advice, you probably have the money" to buy these products, Kennedy said.
In the end, analysts say the Connected Stores will only work if they can attract new customers willing to frequently purchase goods and services in the store versus simply buying products on a competitor's website. At the recent annual shareholders meeting, interim CEO G. "Mike" Mikan said ending showrooming is a "top priority for our team."
A recent survey by ComScore showed that 35 percent of respondents said they practiced showrooming. Of this group, 60 percent said they had originally planned to purchase products in the store but changed their minds while there and bought them online, mostly because they found better prices.
To get new people through the door, Best Buy needs to create a feeling of excitement, Kennedy said. Though the Connected Stores are solid, they probably won't blow anyone away, she said.
Thomas Lee • 612-673-4113