David Joles, Star Tribune
Best Buy and Target end Geek Squad experiment
- Article by: Thomas Lee
- Star Tribune
- April 2, 2013 - 9:56 PM
The Geek Chic experiment has come to an end.
Best Buy Co. Inc. and Target Corp. confirmed Tuesday they agreed to end a partnership that stationed Geek Squad agents at Target stores in Denver and Minneapolis.
The six-month pilot program allowed Geek Squad agents to offer services to electronics customers at 29 Target stores, including installation, repair and warranty plans. The program covered a wide range of products — from mobile phones and MP3 players to e-readers and home theater systems.
For Best Buy, the decision was not entirely surprising. Since CEO Hubert Joly joined the company in September, the Richfield-based consumer electronics retailer has refocused the company’s attention on fixing store operations, which accounts for most of its $51 billion in annual sales.
“As part of our ongoing … transformation efforts we have been very clear that we are focused on the company’s core business, including the Geek Squad opportunity with Best Buy’s own customers,” company spokesman Matt Furman said in a statement. “We have valued our collaboration with an outstanding Target team, whom we admire and respect as retail leaders and hometown business colleagues.”
When the two Minnesota retail giants announced the partnership last August, both companies had suffered from weakening electronic sales. They declined to say why the program was discontinued.
“Target is committed to providing our guests with the latest products and tech support services coupled with our exceptional everyday values,” the company said in a statement. “We will continue to evaluate opportunities to meet our guests’ needs and deliver on our ‘Expect More. Pay Less.’ brand promise.”
Despite investing money to remodel the electronics department and adding Apple “mini-stores,” Target has struggled to grow electronics sales amid fierce competition with Wal-Mart, Amazon and Best Buy. The company redesigned its entertainment sections, hoping any boost in DVDs, CDs and books would spill into its adjacent electronics departments.
Analysts say Target has lost electronics sales because it has not cut prices as aggressively as its competitors. In January, the retailer said it will match prices that customers find at Amazon.com, Walmart.com, BestBuy.com, Toysrus.com and Babiesrus.com, as well as matching its own online prices.
Under previous leadership, Best Buy had hoped to lessen its reliance on store sales by expanding its venerable and highly profitable Geek Squad brand to outside markets like small businesses, home energy audits and car dealerships. In addition to Target, the company also provided 24-hour tech support to eBay customers.
Since Joly took over the electronics giant in September, Best Buy has shifted its time and cash to more pressing matters such as reviving store sales, overhauling its digital and inventory operations, and matching competitors’ prices. The company is expected to dissolve its venture capital unit and pull the plug on its international operations in Europe and China.
Last month, the company laid off 400 corporate employees as it seeks to cut costs by more than $700 million over the next several years.
“Best Buy wants to get the U.S. business fixed first,” said Laura Kennedy, an analyst with Kantar Retail consulting firm in Boston. “They want to do one thing at a time.”
George Sherman, the executive who oversaw Geek Squad and championed its expansion, left the company in March.
Expanding Geek Squad outside of Best Buy stores, where the brand enjoys its strong popularity, may not have been a successful strategy, Kennedy said. For example, would a small business entrust Geek Squad over more experienced IT firms to protect and store valuable data?
“I think it makes sense only if Geek Squad was recognized as a brand people can trust outside of Best Buy,” Kennedy said.
Thomas Lee • 612-673-4113
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