Why Best Buy Is Expanding Into Home Healthcare
The US and the world at large are in the middle of an aging population crisis. Better medical care and technology are significantly increasing life expectancy, while decreased fertility rates have increased the number and proportion of people over 50. This has brought us to the first time in our species' history where older people are soon set to outnumber the young.
This presents a new challenge modern retail. The 50 plus age group controls around 70% of all discretionary spending, making them an essential marketing demographic.
Best Buy
It wasn't so long ago that electronics retailer, Best Buy was in serious trouble. Popular brands such as Amazon and Walmart were slowly pushing it out of the game. For a while, it really felt like Best Buy's days were numbered.
However, the famous brand wasn't about to go down without a fight. Through some innovative thinking, Best Buy managed to turn their fortunes around and return to profit. It achieved this by prioritizing superior customer service and experience — both in-store and in the homes of its customers. With the scope and complexity of the technology it sold ever-increasing, there was a need among customers for experts to help them figure out how it all works. During this period, Best Buy's "Geek Squad" (i.e. tech advisors) department grew to 20,600 employees.
"We have broadened our definition of services," said Best Buy CEO, Corie Barry. "Annual memberships for Total Tech Support are just one area. There are also free services and partnerships to deliver Apple Care repairs. The goal of services we provide is to strengthen our customer relationships. We aim to be the CTO of your daily life."
Thanks to this incredible service offering, Best Buy was able to inspire a new generation of customer loyalty and turn its fortunes around. Seeing the potential of in-home support and the healthcare needs of the aging population, Best Buy discovered an opportunity to offer a new kind of domestic service.
Healthcare
Best Buy wants to use its technological expertise to help its elderly customers live better and fuller lives by helping them and their families care for their health needs in their own homes. Best Buy already sells consumer healthcare devices. But it is now looking to expand, adding digital analytics and monitoring services to its offering.
Morgan Stanley estimates that healthcare could bring in $11 billion to $46 billion in potential revenue for Best Buy over the long term. In the short term, it could add up to $500 million to $2 billion by 2025. Best Buy has already been spending big in the healthcare market as well, having achieved acquisitions totaling $1 billion in value. This includes the purchase of smartphone, smartwatch, and medical alert device developer GreatCall for $800 million.
With these devices, healthcare providers, family members, friends, and caregivers can monitor the health situation of their loved ones and charges 24/7, all without disturbing their day-to-day lives. Biological information, such as sleep patterns, heart rate, and more can be combined with behavioral data such as medication schedule adherence, steps taken, and exercise, to give those who care more peace of mind. More importantly, such tools can empower older members of society to stay in their own homes.
"Best Buy is evolving from sales of wearable devices and other healthcare technology to include the provision of healthcare services for seniors," said the Morgan Stanley report. "Healthcare is shaping up to be Best Buy's next frontier of growth. While Best Buy isn't the only one eyeing the promise behind the intersection of healthcare and technology — Amazon, Walmart, and Apple, for instance, have their respective health-related initiatives —Best Buy's focus on serving an aging population [not to mention its existing home tech support infrastructure] will create an untapped white space opportunity."
Final Thoughts
The future is once again looking bright for Best Buy, and we could very well soon see the brand transforming from a simple retailer of consumer electronics into a major player in the healthcare space, offering new and innovative ways to help an aging population manage their health from the comfort of their own homes.
You can hear Best Buy's Vice President of Retail Operations and In-Store Services, Shari Rossow, speak at Future Stores West 2020, taking place in June at The Sheraton, Seattle.
Download the agenda today for more information and insights.