Best Buy Hires a Designer and Gets Its Future in Order
Best Buy's (BBY) move to hire Aura Oslapas as its chief design officer could be a big step in its war with Walmart (WMT) and Target (TGT). For the first time, it gives the retailer an ability to develop private-label products and other items in collaboration with partners that could give it an edge against its discount competition.
Oslapas has a wide ranging background in retail, having worked for Esprit de Corps and as a consultant to Target. Her experience will come in handy as Best Buy competes with discounters and online operators that want a bigger piece of the consumer electronics market.
Best Buy has been developing packaged hardware-and-services deals, such as discounts on computers bundled with broadband service (i.e., its own Connect service). Such combinations, however, are often pricey propositions, offering savings for techies and business customers who intend to make premium purchases but providing little enticement for consumers with more limited means who might find Walmart and Target viable alternatives.
The idea, of course, is to develop well-designed, competitively priced offerings that Best Buy can use as its discounting wedge against Walmart and Target -- without having to wage brutal discounting wars on name-brand products. The discounters can lose money on electronics and make it on milk and socks. Best Buy can't.
Best Buy's rivals are getting more aggressive all the time. Recently, Walmart unveiled its own kind of combo deals in electronics. Although more modest than Best Buy's, its computer packages -- which include a laptop, set-up assistance, a printer and accessories -- begin at under $400. That's just a few bucks more than a year on Best Buy's least expensive Connect broadband plan.
Target (TGT) isn't going to be left out of the action, either, particularly given how the intensity of electronic competition seemed to catch it by surprise in the last holiday season. Its latest electronics initiatives are set somewhere between Best Buy's elaborate and Walmart's basic electronics push. Target is offering a support service, 1-877-myTGTtech, as well as a streamlined cellular phone shopping operation online and in stores dubbed Target Mobile. It also is providing a trade-in program that grants credit on purchases when customers turn in their unwanted electronics.
Best Buy has been adding exclusive products and services, some of which are designed to appeal to consumers on a budget. Its Geek Squad electronics trouble shooting service, for example, provides sophisticated services for major electronics users. However, it also can deal at a reasonable price with a dodgy computer that's not so far gone it warrants immediate replacement. Those customers represent revenues now and maybe bigger sales later as the economic downturn fades and -- particularly for younger customers -- their incomes pick up again.
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