Best Buy (NYSE: BBY) turned its business around by leaning heavily into services. Its Geek Squad offers something that Amazon can't easily duplicate, and the company's outgoing CEO (and future executive chairman) Hubert Joly seems to understand that retail won't be the chain's only offering going forward.
That's why the chain bought GreatCall, the company behind the Jitterbug phone, for $800 million in August 2018. In addition to offering the phone with big buttons, Great Call also sells health monitoring and emergency services.
Best Buy made the deal because America has about 50 million citizens older than 65, and that total will grow by 50% over the next 20 years. That's a lot of people who might subscribe to a service that sends someone to help if they fall and can't get up.
Best Buy has shown that it's focusing on more than just its stores. Image source: Best Buy.
Best Buy grows its health business
Joly, who steps into his new role with the company next month, has been leading his company's Best Buy 2020 initiative. It's an aggressive campaign to "enrich lives with technology and further develop our competitive differentiation," the CEO explained in the chain's first-quarter earnings call.
In health, we continue to make progress, both in terms of scaling the GreatCall consumer devices and services, and advancing our commercial monitoring service with a focus on aging seniors. Our focus is to enable seniors to live longer in their homes and help reduce their healthcare costs. We believe that the combination of technology and our human touch provided through the ability to access and engage people in their home, these are highly relevant and differentiated proposition.
Best Buy plans to open a third GreatCall "caring center" in October in San Antonio. The call center will house 3,400 customer service agents and operate around the clock to provide technical phone support, concierge services, and urgent response services to the company's customers and subscribers.
The retailer made another purchase recently in the healthcare space. It has acquired Critical Signal Technologies (CST), which Joly described as a senior-focused health services company.
CST has approximately 100,000 senior subscribers. Some of the CST services [offer] a supplemental benefit under their Medicare Advantage plan. Coverage under Medicare Advantage plans is helpful to growing our commercial business because it allows us to engage with insurers and build our service into their plans as a way to both improve their member experience and help them save on costs.
A smart play for Best Buy
Technology can make healthcare monitoring services cool (or at least cooler than the commercials with the older woman who falls and can't get up). Best Buy can sell these products and services alongside other top tech to take some of the stigma away.
These services will be in heavier demand as a tech-savvy population reaches an age where it needs them. Today's 55-year-old may not have had a landline for a decade and has used the internet for 20-25 years. That consumer will be more willing to accept technology-based solutions for any problem than someone who grew up in a less-connected era.
Best Buy's healthcare efforts are a long-term play that will become a growing part of the company's business. It's a very smart move that diversifies the brand while also giving consumers a deeper way to connect with the company. The full impact won't be felt for years to come, but Joly has laid a very strong foundation for continued success.
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