Best Buy's new five-year plan partly revolves around expanding into the healthcare market and moving from selling wearables and devices to adding the analytics and services needed to help senior citizens age in place.
The healthcare digital wellness push has been made possible by a series of acquisitions by Best Buy as well as investments in services. These investments have been funded by Best Buy's core consumer electronics retail business and investments in services.
CEO Corie Barry unveiled Best Buy's next phase of its strategy called Building the New Blue: Chapter Two. Barry noted that Best Buy has hit its previous targets ahead of schedule and now is targeting revenue of $50 billion in fiscal 2025 with $1 billion of cost savings and a non-GAAP operating income rate of 5%.
Barry said Best Buy's "strategy is working" and the company's goal is to expand with its services footprint as well as continued innovation in the tech space.
Best Buy's goal for fiscal 2025 is to double what it calls significant customer relationship events to 50 million. Barry said the commitment to the customer for tech support, homes visited, consultation, active digital engagement and senior lives supported.
"Our deep understanding of the customer is only matched by our unique ability to meet their needs," said Barry.
Best Buy's Barry noted that the traditional consumer electronics category is at least as stable as other durable good categories. That relative stability combined with tech innovation and new devices will give Best Buy good footing to expand into new markets. "One of the reasons the CE category continues to grow is because of tech innovation," said Barry.
Technologies such as digital health, 5G, foldable phones, 8K TVs are all growth areas. Barry said that Best Buy is uniquely suited to combine tech and high-touch customer service. Indeed, Best Buy has invested in analytics, marketing, people and partnerships with key vendors such as Amazon, Samsung, Apple, and Microsoft.
Perhaps the biggest takeaway is how Best Buy is planning to sell technology as well as services to make integration less complex. With that approach, Best Buy can advance into adjacent categories such as healthcare.
Here are slides outlining Best Buy's healthcare progression.
"We have broadened our definition of services," said Barry, noting that $199.99 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," said Barry. "We aim to be the CTO of your daily life."
Barry said Best Buy's orientation around tech and the culture can move it into healthcare where today it primarily sells devices. Best Buy's acquisition of Great Call last year started a healthcare push.
Asheesh Saksena, president of Best Buy Health, outlined how the retailer is entering the healthcare market. Saksena outlined how the first step in Best Buy's health strategy revolves around bringing health tech to market and helping consumers navigate the landscape.
From there, Best Buy wants to scale its remote monitoring tools and ultimately add care coordination services as a benefit within health insurance plans.
Best Buy will have to move beyond being an omnichannel retailer to one that revolves around services. The healthcare industry is moving toward Best Buy's sweet spot. Consider:
- Technology is making the home a node in healthcare delivery.
- The population is aging and two out of three seniors live with two or more chronic conditions.
- There will be 54 million seniors in 2023 and 90% of them want to stay at home.
- Payments are tied to value delivered and in-home services play into improving outcomes.
- Consumers want more control over health matters and caregiving.
- Best Buy has filled in health technology gaps with acquisitions of Great Call and CST.
Today, Best Buy aims to build out its remote monitoring capabilities via Geek Squad, which installs home technology. Passive monitoring, artificial intelligence, and smart home technology can all improve healthcare outcomes.
With remote monitoring, there's an avenue for Best Buy to serve Medicare users to aid frail seniors. Best Buy is betting it can deliver savings for insurers serving frail seniors for a monthly fee per person. As for home health services, Best Buy also sees a role via its CST unit.
Best Buy executives noted that the company will have to operate differently as it builds out services and drives its retail business with automation, e-commerce, analytics, and fulfillment improvements.