Electric bikes. Patio furniture. Beauty gadgets.
Best Buy is adding sales that may surprise shoppers who often think of its stores and websites as a place to buy smartphones, laptops and TVs.
The company said on Friday that it has already started bringing about 100 skin care devices, including a facial steamer and home appliances for microdermabrasion, to nearly 300 stores and its website.
Best Buy is making a broader push into categories such as fitness and furniture as it looks to push growth beyond the Covid pandemic. The company benefited from early pandemic trends, as people sought out computer monitors for home offices, kitchen appliances for additional home cooking and theater systems or giant TVs to pass the time.
Now, however, the retailer faces a more challenging landscape. It warned in March that it expects a decline in sales in the same store of between 1% and 4% next year after a period of high demand.
There are already signs of a softening in electronics sales, as consumers are directing dollars toward holidays and social events. Major appliance maker Whirlpool fell short of estimates and saw sales fall 8.3% in North America in the most recent quarter compared to last year, the worst decline since the pandemic began. Microsoft, which makes Xbox video game consoles, gave a negative outlook for the coming quarter with an expected decline in the game category.
NPD Group, a market researcher, expects revenue from U.S. consumer electronics to fall by 5% in 2022, 4% in 2023 and 1% in 2024 – but says overall sales will remain higher than at the pre-pandemic level. The declines follow a record-setting year for the U.S. industry with consumer technology sales hitting nearly $ 127 billion, a 9% jump in high sales. by 2020, the NPD Group said.
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Some of the new items are serving consumers ’exit and social change-such as electric scooters, according to Best Buy’s chief merchandising officer, Jason Bonfig.
The retailer has expanded its sales offer in recent years. Best Buy debuted connected fitness products from exercise brands including NordicTrack and Hydrow in the summer of 2019. It launched outdoor grills from Weber and Traeger in June and a line of electric bikes, scooters and mopeds in August. It acquired Yardbird, an outdoor furniture company directly from the consumer, for an undisclosed amount in November.
Best Buy also bought health care companies, including GreatCall, that sell devices and services that can help seniors in their own homes. It is testing services related to new products, too, as part of a pilot program to offer repair services for e-transportation products.
Bonfig said in an interview with CNBC that the company gets notifications from customer and employee feedback – and clicks and searches on its website. For example, he said, some shoppers will ask employees about outdoor furniture when buying a TV or audio equipment for the backyard.
“Our response used to be‘ No, we really don’t have a class on that, ’” he said.
Now, with Yardbird, it’s done. This month, Best Buy added displays at one of its namesake stores and several locations under Best Buy subsidiary, Pacific Sales Kitchen & Home in Southern California. Customers can also purchase outdoor sofas, wicker chairs and more on the Best Buy website.
This year, the retailer plans to add Yardbird and e-transportation displays to about 90 stores, nearly 10% of its estimated 1,000 U.S. store footprint. More than 250 of its stores now have fitness equipment and Best Buy plans to add a larger, more premium experience for products in about 90 stores.
Best Buy can’t break revenue by category of sales, but emerging areas are a strong driver of sales, the company said. At an investor day in March, Bonfig said most of Best Buy’s more than $ 12 billion in sales growth over the past decade came from major products like computers, TVs and appliances, but a third came from new groups such as wearables and virtual. reality headsets.
Bonfig declined to tell CNBC specific growth numbers, but said the youth categories are changing. And he said one of the skin care tools it started offering, the TheraFace Pro, was a “breakout hit.” It sells for about $ 400, with features for cleaning and infrared light therapy. He said the products serve the interests of health and wellness consumers.
Michael Baker, an equity research analyst for retail at DA Davidson, said the addition of sales groups fits in with the company’s history. With the moves, he said Best Buy could remain in the lead, expand the overall addressable market and capture a larger share of consumers ’disposable revenue.
His price target for the company is $ 135, about 46% above where the shares are currently sold.
The biggest risk, he said, is that Best Buy will be able to buy the goods to see them last longer and end up being marked.
Baker said moderating sales can free up time and allow Best Buy to be creative in how it sells and promotes different types of items.
“There’s a focus to meet the need for work from home, learning from home, playing from home-type products,” he said. “In the slow ones, it gives them a chance to see where they’re going from here.”