Best Buy adds beauty gadgets and outdoor furniture to its product line
Electric bikes. Patio furniture. Beauty gadget.
Best Buy is adding merchandise that might surprise shoppers who typically view its stores and website as a place to buy smartphones, laptops and TVs.
The company said on Friday it had started offering about 100 skin-care devices, including a facial steamer and an at-home microdermabrasion tool, in nearly 300 stores and on its website.
Best Buy is making a broader push in categories such as fitness and furniture as it seeks to propel growth beyond the Covid pandemic. The company benefited from early pandemic trends as people sought out computer monitors for home offices, kitchen appliances for more cooking and home theater systems, or giant televisions to pass the time.
Now, however, the retailer faces a more difficult landscape. It warned in March that it expects same-store sales to decline between 1% and 4% in the coming year after a period of very strong demand.
There are already signs of a slowdown in electronics sales as consumers direct their dollars towards holidays and social events. Major appliance maker Whirlpool missed its estimates and saw sales fall 8.3% in North America in the last quarter compared to the year-ago period, the biggest drop since the start of the pandemic. Microsoft, which produces Xbox video game consoles, gave a negative outlook for the next quarter with expected declines in the games category.
Market researcher NPD Group predicted US consumer electronics revenues would fall 5% in 2022, 4% in 2023 and 1% in 2024 – but said total sales would remain higher to pre-pandemic levels. The declines follow a banner year for the industry in the United States with consumer technology sales reaching nearly $127 billion, a 9% jump from high sales in 2020, NPD Group said.
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Some of the new items are aimed at consumers who are going out and getting social again, like electric scooters, according to Best Buy’s director of merchandising Jason Bonfig.
The retailer has expanded its merchandise offering in recent years. Best Buy launched connected fitness products from exercise brands such as NordicTrack and Hydrow in the summer of 2019. It rolled out outdoor grills from Weber and Traeger in June and a line of electric bikes, scooters and mopeds in August. It acquired Yardbird, a direct-to-consumer outdoor furniture company, for an undisclosed amount in November.
Best Buy has also bought healthcare companies, including GreatCall, that sell devices and services that help seniors age in place. It is also testing services related to new products, such as a pilot program to offer repair services for electronic transportation products.
Bonfig said in an interview with CNBC that the company was inspired by customer and employee feedback, as well as clicks and searches on its website. For example, he said, some buyers would ask employees about outdoor furniture when buying a TV or audio equipment for the backyard.
“Our response in the past has been ‘No, we don’t actually have an assortment of that,'” he said.
Now, with Yardbird, it does. This month, Best Buy added displays at one of its namesake stores and a handful of locations under Best Buy’s Pacific Sales Kitchen & Home subsidiary in Southern California. Customers can also shop outdoor sofas, wicker chairs and more on Best Buy’s website.
This year, the retailer plans to add Yardbird and e-transportation displays in approximately 90 stores, nearly 10% of its footprint of approximately 1,000 stores in the United States. More than 250 of its stores currently have fitness equipment, and Best Buy plans to add a broader, more premium experience for these products in about 90 stores.
Best Buy doesn’t break down revenue by merchandise category, but emerging areas have been a strong sales driver, the company said. At an Investor Day in March, Bonfig said most of Best Buy’s more than $12 billion sales growth over the past decade has come from large, established products such as IT, television and appliances, but a third came from newer groups such as wearables and virtual appliances. reality headsets.
Bonfig declined to tell CNBC specific growth numbers, but said the younger categories were resonating. And he said one of the skincare devices he started offering, the TheraFace Pro, was a “resounding success”. It retails for around $400, with cleansing and infrared light therapy features. He said the products meet consumers’ interest in health and wellness.
Michael Baker, retail equity research analyst at DA Davidson, said the addition of commodity groups fits the company’s story. With these changes, he said Best Buy can stay on the cutting edge, expand its total addressable market, and capture a greater share of consumer disposable income.
His price target for the company is $135, about 46% above the current stock price.
The biggest risk, he said, is that Best Buy could buy the merchandise only to see it linger and sell out.
Baker said moderating sales could free up time and allow Best Buy to get creative with how it markets and promotes different types of items.
“There was such a focus on being able to meet the demand for working from home, learning from home, playing from home-type products,” he said. “With these slowdowns, it gives them a chance to see where they can go from here.”