Best Buy is going to start retailing an electric motorcycle sometime this fall, in an effort to repurpose some of the space available in its cavernous stores. I think the bigger opportunity is to use that space to deliver new and different services.

There are lost of things wrong with the gadget business:

  • No CD-type revolution in performance that requires purchase (flat TV screens come close, but name another device. Blu-ray? Not hardly)
  • Consumers are holding onto devices longer, and not expecting them to become obsolete/disposable
  • It's easier, and often cheaper, to buy the stuff online (whether from Amazon, NewEgg, etc.)

It seems that miniaturization is another challenge, along with improved processor speeds and other improvements, in that the stores risk appearing empty because devices are smaller, flatter, and do more things. And a trend toward offering fewer SKUs is being driven by the CPG business, which begs the question of how many permutations of mp3 players do shoppers need to trip over.

So one of the things Best Buy is doing is finding new product categories to stock. It has had success selling musical instruments. It's supposedly looking at stocking home automation systems.  

But couldn't it do more with its geophysical place-ness? I've long maintained that every business is in the services business, no mater what it sells...or, conversely, needs to completely abrogate the responsibility otherwise. Wal-Mart isn't in the service business whatsoever. Nor is eBay. Brands that try to exist somewhere in the middle risk alienating their customers by failing to meet their expectations. Were Detroit's cars retailed as products or service relationships? 

Best Buy has a solid presence in services with its Geek Squad (and a less certain one in its ownership of Napster), but its stores are still configured like they're intended purely to sell products. Imagine if it looked at all that real estate with an eye to fully realizing the services orientation:

  • Repair would be a section, not a countertop. The geeks would be available to fix or tune-up any device. There'd be a waiting area like they now have at nicer car dealerships. Give away free drinks. Sell extended service plans that truly went above and beyond the manufacturer guarantees. Allow people to customize their stuff with more variety, and do it all on-site (there's some suggestion that the mobile A/V bays will be used to service the new electric bike) 
  • It would operate a car service. Geek Squad cars go the wrong way; the idea would be to bring people to the store, along with their broken equipment. Bodies walking through the doors are an opportunity to sell, or at least to satisfy. A complementary offering would be phone help, somehow linked directly to service personnel at a local store. Risk allowing geeks to establish ongoing relationships with customers; it'll keep both sides of that equation loyal
  • Space would be created for activities. Why not go beyond selling musical instruments and offer rehearsal space for rock bands? Ditto for classes of every flavor (i.e. do what Apple stores do). Couldn't opportunistic events occur in stores, from local band performances, to community club meetings? Again, getting people through the doors is always a good thing, and doing so without hitting them over the heads with sales pitches is even better. 

Electric motorcycles will be cool, though at almost $12,000/each, I don't think they're going to sell many of them. I'm all for putting other cool and different products in the stores. But this dim bulb thinks Best Buy's future is in services, not products.

Original Post: http://dimbulb.typepad.com/my_weblog/2009/07/services-not-products.html

Leave a Comment