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5 reasons why plugging Best Buy into Target might work

August 27, 2012 by Chris Petersen — Owner, IMS

As I departed on my around the world journey to teach IMS Retail University, I had ample time to watch people using technology during my lengthy airport layovers. From preschoolers to adults, tablets abound in airports! While I was playing with my camera gear in preparation for the trip, a number of people noticed my big camera and lenses. None of them asked me about my photography! They all wanted to know how to do something with their photos, and specifically how to move photos from their phones to their tablets, or vice versa. While our digital world is converging, most of us are mere mortals who need some assistance.

If a consumer buys an iPad in a mass merchant like a Target store, there is virtually no staff available to talk with. Any staff on the floor are at the checkout or stocking shelves. There is no assisted sale in Target's retail business model. Like most mass merchants, Target is truly product centric, with almost no potential to deploy staff to create a consumer experience.

Most people can of course figure out how to touch icons on a tablet to view photos, and consume content. But, how do you move photos from your phone to a tablet? How do you play videos from your tablet on your flat screen TV ... and what cables or dongles do you need? For the consumer, it's no longer just about buying a device! Today, it's all about how to make devices do what you want them to do in a digital lifestyle for school or work.

Best Buy and Target are piloting Geek Squad in Target Stores

This joint retailer pilot received a lot of attention recently. I personally think that this pilot is truly a case of converging technology, which is creating consumer needs for services that are beyond historical retail models of selling products.

Target's consumers are looking for answers and connected solutions. Best Buy is looking for new consumers, and specifically how to reach women and families. There was a great RCE blog posted with the title 50 Shades of Frustration, documenting women's experience in a typical Best Buy store. Clearly, many women are not enamored with Best Buy's store experience.

So, is the Geek Squad and Target a match made in heaven? Most retail partnering experiments and retail mergers fail. But, the Best Buy Geek Squad in Target might just work. The consumer needs for services in a mobile and highly connected digital world require more than the traditional product centric merchandising of mass merchants.

Five reasons why blending Geek Squad strengths with Target might work now:

1. Digital convergence is creating complexity

Consumers want to know more than how to operate a single device. They want to know how to connect them and share content between them, any time anywhere.

2. Target needs to upscale electronic sales mix and differentiate value

Target's main rival Walmart already sells all forms of technology in store, and a large assortment online. Having Geeks and services in store provides Target a major differentiator and ability to engage loyalty through services.

3. Best Buy needs to be successful with women ... families

Best Buy has a host of issues. Declining store traffic, losing sales to showrooming, large stores that are expensive to operate are just a few. Women are the "Chief Procurement Officers" for the home. Best Buy needs to find a way to reach the female (and male) consumers that don't like shopping Best Buy's male centric environment.

4. Everyone needs a little help with the rapidly changing connected world

Most of us are comfortable with devices like computers or even smartphones. But, with today's apps, ecosystems, and cloud storage ... we all need a little help in getting things connected and working together the way we want.

5. Services are highly profitable, generate traffic and repeat purchases

It has been noted by many pundits that Best Buy's Geek Squad is the driving force keeping Best Buy alive and profitable today. The Best Buy techs sell the highly profitable warranty and maintenance services, which not only generate 50%+ margins, but loyalty of consumers to return for service and support.

Partnerships work if there is a financial win-win for both

The Denver Post reports that this is not a small pilot. The Geek Squad will be placed in all 28 Target stores in the Denver market. These stores will have true Geek Squad "agents" dressed in their trademark white shirts with clip on black ties. According to Target's Vice President of Electronics, "What we are looking to do is to really include all of the services that a typical guest could get at any Geek Squad in a Target store."

Bravo and kudos to both Target and Best Buy for testing a full market for 6 months. This test will enable true measurement of incremental impact on sales, profit, services and most importantly value perceived by consumers. If this test is successful, my only questions would be:

• How do the partners divide the profits when Best Buy provides the IP and labor?
• Who owns the consumer relationship going forward after the initial sale?

Note to Best Buy regarding other potential opportunity ...

Airports are one of the most captive places on planet earth. People are bored and looking for new things to try and do. Seems like a perfect place to test a mini Geek Squad kiosk! As I write the close, I'm now on a 5 hour layover in SFO airport, and I'm still getting questions from people on how to delete, manipulate and move photos. Help! We need some Geeks at the airport!

We'd like to hear from you if you visit a Target store with Geeks ...

While you can run the numbers and everything looks good on paper, retail is detail! It's all about execution! You can't just "put" Geek Squad agents into Target stores. There needs to be a place, context and a process. In short, the experience with Geeks has to feel right as part of the overall Target experience, especially for Target's core customers – women age 15 to 54.

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