Best Buy Offering Third-Party Retail Pick-up, Subscription Tech Service, Lease-to-Own Options

Entering the winter retail season, Best Buy is diversifying its consumer electronics footprint and contact points in an effort to meet changing consumer habits.

As previously reported, the nation’s largest CE chain is offering free next-day shipping on myriad items through Christmas — a practice launched by Amazon Prime earlier this year.

Indeed, Best Buy saw domestic online revenue increase 15% to $1.4 billion in the most-recent fiscal period. As a percentage of total domestic revenue, online revenue increased 15.6% versus 13.8% last year.

To better facilitate consumers’ schedules, the chain launched 175 alternate pick-up locations in areas where either store locations are not convenient or the ship-to-home option is not desired. Locations include UPS stores and CVS pharmacies in select markets. Best Buy is also offering curb-side delivery in New York.

“To build awareness of these expanded experiences, we have already kicked off a comprehensive local market marketing campaign that includes stores, train stations, billboards, digital and email,” CEO Corie Barry said on the Nov. 26 fiscal call. “Based on our data, we believe there is much uncapped opportunity to serve New York clients in their homes.”

Best Buy has expanded its in-home Geek Squad concept to subscription-based “Total Tech Support,” providing unlimited Geek Squad support for all household technology no matter where it was purchased.

A new pilot program includes router setup and installation, parental controls to manage every device on the network, a subscription to Microsoft Office 365, and 1 terabyte of cloud storage along with all the standard Total Tech Support benefits.

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“It continues to get strong customer reviews [2 million registered subs] and members spend more and are twice as likely to use other services than non-members,” Barry said. “We are building on this early success to continue to deliver more benefits our members are asking for.”

The chain has also borrowed from the rent-to-own market, rolling out a proprietary lease-to-own option on select big-ticket items. The option is now fully operational in 45 states, including California and New York.

Barry said that since bowing the program nationally in March, about 65% of lease-to-own consumers are either new to Best Buy or haven’t made a purchase in the last year.

“This provides another purchasing option in addition to our existing strong credit card offer allowing us to help customers make purchases they might not otherwise be able to,” she said.

Best Buy Q3 Entertainment Revenue Plummets

Best Buy can’t wait for the winter holiday retail season.

The nation’s largest consumer electronics retailer Nov. 26 said third-quarter (ended Nov. 2) domestic entertainment revenue dropped nearly 21% in same-store sales compared to a gain of 12.4% during the previous-year period. International entertainment sales fell 31% compared to a gain of 10.8% last year.

The entertainment segment includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

Entertainment represented 5%, or $448 million of domestic revenue, compared to 6%, or $525 million during the previous-year period.

International revenue represented 5%, or $40 million of same-store sales, compared to 7%, or $58.3 million last year.

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Domestic revenue increased to $8.96 billion, up 2.4%versus last year. The increase was driven by comparable sales growth of 2% and revenue from GreatCall, which was acquired in Q3 last year, partially offset by the loss of revenue from store closures in the past year.

The largest comparable sales growth drivers were appliances, headphones, tablets, services and computing. These drivers were partially offset by declines in the gaming and home theater categories.

“We are excited about our holiday plans,” CEO Corie Barry said in a statement. “Customers ordering online will get free next-day delivery on thousands of items all season long with no membership or minimum purchase required. They can also choose to pick up their products in a store within an hour of placing their order.”

Indeed, domestic online revenue increased 15% to $1.4 billion due to higher average order values. As a percentage of total domestic revenue, online revenue increased 15.6% versus 13.8% last year.

As the holidays loom, Best Buy is offering free next-day delivery on myriad items, excluding bigger and heavier items such as big-screen TVs and refrigerators.

With the service “Store Pickup,” customers can get their order ready within an hour at their local Best Buy. Best Buy reports 40% of online sales are picked up in stores.

Roku App Now Live on Apple Watch

Last month Roku announced the Apple TV app was available on the Roku platform. Now the Roku app is now available on the Apple Watch.

To access the new functionality, Apple users must update the Roku app to version 6.1.3 via their iPhone, and the app will appear on Apple Watch.

The app on Apple Watch features a remote feature to control the Roku device directly from Apple Watch through a circular crown on the watch.

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Apple users can switch channels on their TV with a tap of the watch screen. Channels are listed in order of most recently launched.

Simply tap the voice icon in the app and say commands like “Launch Hulu,” “search for comedies,” “switch to HDMI 1” for your Roku TV, and much more.

Use the Roku app for Apple Watch to signal your Roku remote and it will play an audible chime so you can find it in the couch cushions. Available on the Roku Ultra and select Roku TV models.

Best Buy Eyeing $50 Billion in Revenue, $1 Billion in Cost Cuts By 2025

Best Buy is projecting strength and growth heading into an investor event Sept. 25 in New York.

The consumer electronics retail giant’s “Building the New Blue: Chapter Two” under new CEO Corie Barry includes revised financial targets through 2025.

The company plans to trim $1 billion in costs over the period, while boosting revenue to $50 billion, up from 2020 guidance of $43.1 billion to $43.6 billion.

Heady goals in a retail environment under constant siege from ecommerce giants such as Amazon and Walmart, among others.

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Indeed, Best Buy last month revised downward fiscal-year revenue estimates — largely due to ongoing tariff concerns with China.

The company, like most CE retailers and manufacturers, relies in large part on Chinese-made products, including its line of Insignia TVs.

Second-quarter entertainment same-store sales dropped 13.7% compared to a 8.5% increase a year ago. The business unit includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

Domestic entertainment revenue topped $441 million, down from $608 million during the previous-year period. The segment represented 5% of Best Buy’s domestic revenue compared to 7% last year. Best Buy closed 13 large format stores in the period.

Regardless, CFO Matt Bilunas remains optimistic.

“In this next chapter, our focus continues to be top-line growth,” Bilunas said in a statement. “We also believe the initiatives we will outline today … along with continued focus on cost reductions, will result in operating income rate expansion over the five-year time frame.”

NPD: Consumer Electronics Revenue to Increase 3% Annually Through 2021

Increased consumer demand for big-screen televisions, wireless headphones, speakers and over-the-top video, consumer electronics is projected to grow 3% annually through 2021, according to new data from The NPD Group.

“Steady single-digit growth is notable in a mature market where consumers are not replacing or repurchasing items at the same rate they did in prior years,” Stephen Baker, VP, industry advisor for The NPD Group, said in a statement. “While some categories offer new, greenfield growth opportunities, the majority of revenue growth will occur from trade-ups and average sales price (ASP) increases, as opposed to rising unit volume sales.”

The movement to large screen TVs is raising category revenue, despite  expected flat unit sales overall. By 2021, more than 25% TV unit sales will be for a screen size larger than 65-inches, and those will account for 60% of the category’s sales dollars.

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Audio, true wireless headphones have become the format of choice for consumers and are expected to see tremendous growth over the forecast period. NPD said true wireless headphones will hold three-quarters of the headphone market dollar share by 2021.

“True wireless earbuds have evolved into virtual must-have mobile phone accessories, and many products now offer features such as hands-free digital assistant access and touch/tap controls for interfacing and controlling smartphones. This bond between headphone and smartphone will help drive new sales in the future,” added Ben Arnold, executive director, industry analyst. “Headphones is just one example of a mainstay category that is driving growth through new feature sets, we expect brands in other segments will take a similar approach to find growth in this competitive environment.”

While smart home technology will begin to slow compared to recent years, NPD expects it will remain an area of strength as decreases in ASPs will make products more accessible and drive acceptance among consumers. Home automation revenue is expected to grow 40% from 2018 to 2021.

During this timeframe NPD says smart display dollar sales are expected to triple as they become more available and serve both as a smart home interface device and a point of modern convenience.

 

Parks: More Than 50% of Connected Homes Find Voice-Activated Software Appealing

Voice-activated speakers and movie, TV show searches on connected televisions isn’t just a fad.

New research from Parks Associates finds that more than half of domestic broadband households consider voice control of connected entertainment devices to be appealing.

Voice functionality has also become an important buying consideration, with 12% of U.S. broadband households stating it is a top feature when buying a new smart TV.

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“Voice has made a sizeable impact in the smart home and connected CE space, with four out of ten U.S. broadband households currently using some form of smart speaker,” senior analyst Dina Abdelrazik said in a statement. “Since their introduction in 2014, smart speakers have quickly risen in popularity among consumers as an important interface to control and connect the many different devices in the home.”

Voice is extending beyond the smart speaker into smart home adjacencies such as smart appliances, smart doorbells, and smart TVs.

Parks Associates: Method of Controlling TV Via Voice

In 2017, only 3% of CE device users reported using voice commands when watching a movie or TV program; Parks Associates’ latest research finds that almost a fifth of consumers now use voice commands to control their connected entertainment devices several times a week.

“Voice interfacing with the entertainment ecosystem is improving the overall user experience through ease of content discovery and recommendations,” Abdelrazik said. “Custom installers can benefit with the use of voice to connect entertainment and smart home systems in the home via a natural and easy-to-use interface.”

Parks is presenting the findings during a Sept. 14 presentation at CEDIA Expo in Denver.

Roku Launches Branded Soundbar, Subwoofer

Roku Sept. 4 announced it is expanding its portfolio of premium audio products to include a sound bar and wireless subwoofer.

The Roku Smart Soundbar is an easy way to add premium sound movie, TV and music streaming to any TV with an HDMI input. The optional Roku Wireless Subwoofer expands the Roku Smart Soundbar with deeper, richer bass.

Both products can be pre-ordered from Roku.com for $179.99 each. General availability at Best Buy and Roku.com is also expected in October.

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“The Roku Smart Soundbar is a great value and makes it easier than ever to add incredible sound and powerful streaming to any TV. In addition, if you want heart-pounding bass you can easily add that too,” Mark Ely, VP, players and whole home product management at Roku, said in a statement.

The Roku Smart Soundbar is powered by the Roku OS. Four premium drivers offer distinctive clarity, immersive depth and dynamic bass response.

Advanced volume modes enable consumers to reach for the remote less often. Automatic Volume Leveling offers uniform audio level across various types of content, including quieting loud commercials. Night mode lowers the volume for louder scenes and boosts it for quieter ones. Speech Clarity boosts voice frequencies to address intelligibility for crisp, clear dialogue. Automatic software updates will deliver new capabilities over time.

Additional features include: Roku Connect: A wireless protocol that seamlessly connects the Roku ecosystem, Dolby Audio, Bluetooth connectivity, HDMI/Optical Support inputs; Roku Search: cross-channel search offers results ranked by price; Roku Voice search for entertainment, replay, turn closed captions on and off and more through the Roku Voice Remote.

Voice Assistant Compatibility: The Roku Smart Soundbar works with Google Assistant and is compatible with Amazon Alexa-enabled devices
Roku Voice remote: The point-anywhere remote features channel shortcut buttons and TV on/off buttons.

 

UHD Alliance Introduces ‘Filmmaker Mode’

The UHD Alliance, along with leaders in consumer electronics, the Hollywood studios and members of the filmmaking community, Aug. 27 announced collaboration on a new viewing mode for watching movies and episodic TV called “Filmmaker Mode,” designed to reproduce the content in the way the creator intended. (L-R): Panasonic’s Ron Martin, Vizio’s Kenneth Lowe, Warner’s Michael Zink and director Rian Johnson were on hand to announce the launch. (Photo by Patrick T. Fallon for UHD Alliance)

Best Buy, Roku, Apple Shares Rebound Following Tariff Delay

Shares of Best Buy, Roku, Apple and other consumer electronics retailers/manufactures rebounded after President Trump delayed until Dec. 15 a proposed new 10% tariff on cellphones, laptop computers, video game consoles and other goods manufactured in China.

The tariff on $300 billion worth of products, which Trump announced Aug. 1 as part of ongoing trade tensions with the world’s No. 2 economic power, would have been on top of an existing 25% tariff Trump previously imposed on $250 billion worth of other Chinese goods.

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The delay came after intense lobbying efforts in the nation’s capital convinced administration officials the new tariff could have serious implications to the U.S. economy entering the fourth quarter.

“Just in case they might have an impact on people … what we’ve done is we’ve delayed it so they won’t be relevant for the Christmas shopping season,” Trump told reporters on Aug. 13.

The news was welcomed by Wall Street, which saw shares of Best Buy, Apple and Roku rise 6.5%, 4% and 1%, respectively.

Roku is one of the largest manufacturer of Internet-connected televisions, with many originating from China.

But to the Consumer Technology Association trade group, delaying proposed tariffs only prolongs market uncertainty and impacts consumers 401(K) pension or retirement accounts, among other issues.

“Retaliatory tariffs are bad economic policy in the short and long term,” Gary Shapiro, CEO of the CTA, said in a statement. “The administration’s legally dubious trade war is compromising America’s global leadership.”

Previously-announced tariffs starting Sep. 1 will affect $52 billion in consumer technology products, and the tariffs starting Dec. 15 will affect $115 billion in products. Since July 2018, Section 301 tariffs on China have cost the consumer tech industry over $10 billion, including $1 billion on 5G-related products, according to the CTA.

“Tariffs are taxes,” Shapiro said. “The Chinese government doesn’t pay for them – Americans bear the burden. And next month, we’ll begin to pay more for some of our favorite tech devices – including TVs, smart speakers and desktop computers. The administration should permanently remove these harmful tariffs and find another way to hold China accountable for its unfair trading practices.”

Best Buy Widens Q1 Entertainment Sales Decline

Christmas is officially over. The post-winter holiday blues hit Best Buy entertainment sales with a thud.

The nation’s largest consumer electronics retail chain May 23 reported a 12.7% drop in same-store entertainment sales to $424 million for the quarter ended May 4. The business unit includes DVD/Blu-ray Disc movies, video game hardware and software, books, music CDs and computer software.

Entertainment sales declined less than 1% to $504 million in the previous-year period.

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International entertainment sales dropped 14% to $33 million, compared to an 8.3% decline to $41.8 million in the previous-year period.

Overall, Best Buy upped domestic operating income 24.3% to $332 million from $267 million last year. Revenue upped less than 1% to $8.48 billion from $841 billion.

The largest comparable sales growth drivers were appliances, wearables and tablets.

Domestic ecommerce revenue of $1.31 billion increased 14.5% on a comparable basis primarily due to higher average order values and increased traffic. As a percentage of total domestic revenue, online revenue increased to 15.4% versus an increase to 13.6% last year.

On June 11, CEO Hubert Joly transitions to the newly created position of executive chairman. CFO and strategic transformation officer Corie Barry becomes Best Buy’s fifth CEO and first female chief executive.

Joly appears to relish the transition from day-to-day operations to cushy board oversight.

“I am very proud of the seamless transition we have decided to implement, as it reflects positively on our momentum as well as our focus on executive development and succession planning,” Joly said in a statement.