Archives for October 2018

Best Buy has a new program known as Assured Living, that uses mobile web and smart home healthcare technology to help adult children remotely check in on the health and safety of aging parents at home. It can provide peace of mind for caregivers and delay the need for an elderly relative to enter assisted living—saving them thousands of dollars a month.

The Opportunity

• By 2020 about 45 million Americans will be caring for 117 million seniors, taking responsibility for food delivery and health monitoring.
• The connected home market is estimated to be worth about $28 billion and is growing roughly 20% annually.
• Three out of four caregivers want to use technology to make their duties easier, but only 7% have done so, according to a 2016 study sponsored by AARP.
• Smart home gadgets are a fast-growing consumer segment. Some 80 million devices were sold globally last year, a 64 percent rise from the year before, according to IHS Markit.
• People are living longer and preferring to stay in their homes—delaying entry to assisted care facilities.

Future Sticker Shock

What makes Assured Living such a huge potential payoff for Best Buy is how much it can save both aging parents and their children. The average cost of assisted living is now more than $3600/month and nursing home care is generally twice that amount. Delaying entry into a care facility could save patients/families $43,000 a year on the low end. Even delaying entry into assisted care for a few months could save thousands. In-home health is a less expensive alternative (average cost of $20/hour), but can also end up costing thousands of dollars a month.

The Assured Living Package

Best Buy sells an entry-level package of digital home health gear for $389.96, installs it for $199 and provides a monthly monitoring service for $29. It starts with a free in-home assessment with families to determine the appropriate monitors and devices. Geek Squad tech workers install the custom-built systems and family caregivers receive information or alerts on their smartphones.

Options range from basic cameras and motion sensors that cost $200 to a range of smart products that can monitor and learn a loved one’s typical pattern of activity and alert caregivers through a smartphone app of unusual changes that may require attention. Those items can cost up to $1,000.

The package also includes pressure monitors to show if the person is still in bed or on the couch. Caregivers can also quietly check to see if their parents locked the front door before going to bed or how many times they got up during the night. Sensors can show whether a parent opened the medicine cabinet or refrigerator that day, and his/her quality of sleep and activity levels, according to Best Buy. Assured Living provides enough information to allow caregivers to continually keep tabs on aging parents without disrupting their lifestyle.

The Lessons for Category Managers

Listen to customers – “The idea for Assured Living was born in response to customers who came into our stores looking for smart home technology to help keep tabs on their aging parents,” says Best Buy vice president of strategic growth office AJ McDougall.

Plant seeds – Best Buy partnered with the Mayo Clinic back in 2011 to create a senior care technology lab. The lab was used for focus groups, designing, prototyping and piloting new services and technologies to better understand the needs of seniors.

Remember your core customers – Baby boomers fueled the growth of Best Buy for decades and continue to do so. A large percentage of baby boomers have aging parents. Best Buy has millions of Reward Zone baby boom customers who they communicate with regularly.

Recognize the opportunity – The sales potential is in the tens of billions for the senior connected home market. Best Buy is uniquely positioned to take advantage. It’s a complicated purchase and Best Buy’s in-store blue shirts can walk customers through the sale and answer questions. Plus, the company’s Geek Squad tech services group can provide installation of all the equipment. What other retailer can do both?

Partner with experts – Assured Living customers can get 24/7 access to Ask Mayo Clinic online, that walks them through questions based on symptoms a loved one may be experiencing, and then delivers personalized care guidance. Assured Living customers can also call a Wellness Line sponsored by UnitedHealthcare which includes access to wellness coaches, senior-focused health education, and referrals to local community resources.

Acquire complementary products/services – With the recent acquisition of GreatCall, Best Buy will have direct access to 900,000 Jitter Bug (senior cell phone) service subscribers. GreatCall also offers mobile products and wearables that connect the user to family caregivers, provide general concierge services, answer service-related questions and dispatch emergency personnel.

Get the word out – Assured Living is a huge opportunity for Best Buy, but it will need to reach out and educate baby boomers. On the plus side, baby boomers have been targeted for years and marketers know how to reach them (especially Best Buy). From direct mail to TV (think evening news) boomers can be targeted efficiently. AARP is helping to get the word out by advertising a 10% discount on Assured Living monthly plans.

Best Buy is an adept marketer and advertiser. But Best Buy may have to look at the size of this opportunity and consider a special and more robust marketing budget dedicated to Assured Living. Why? Unlike razor thin profit margin products like TVs and laptops, Assured Living offers higher margins and monthly revenue streams. If Best Buy can dominate this market, Assured Living could provide the retailer with assured growth for years to come.

 

Remember a time when Halloween was simple? Those days are over. For category managers, the huge opportunity (over $9 billion expected in sales this year) presents a daunting array of products and strategies to consider.

Second only to Christmas in dollars spent, Halloween continues to grow. This year, consumers are expected to spend $3.4 billion on costumes, $2.7 billion on candy, $2.7 billion on decorations, and $410 million on greeting cards. Greeting cards? We have to assume this includes party invitations.

Some retailers that are doing fright right.

Target

It starts with Target’s Hyde and Eek boutique on their website. Like their stores, Target’s Halloween landing page is clean, uncluttered and upscale. Target presents three different home decorating themes. When you click one, you’ll find home décor items that that go together. Coordinated Halloween décor? Who knew! Plus, Target’s product page offers a unique user experience. When you move your cursor over an individual product, it shows how the product might look in an actual home setting.

The lesson for category managers is always keep your core customers in mind even if it’s just a seasonal promotion. Target is a discounter, but its success is based on appealing to customers from middle to upper income brackets. Coordinated Halloween decorating themes in upscale settings likely hits home with these customers. Target understands their target audience. No bones about it.

Party City

Party City has capitalized on the Halloween opportunity by adding pop-up locations to augment sales at their regular stores. Pop up stores are especially popular with Millennials and because so many brick and mortar stores have closed, there are plenty of good locations and great deals.

If you visit Party City’s website, you’ll find they’ve taken the lifestyle theme to another level with 13 “house illusions”. Each includes the suggested scene, a paragraph describing how it works and a complete list of items needed.

It’s also interesting to look at “Customers Also Bought” sections on Halloween sites. E.g. on Party City’s website, when you click on the “Animated Possessed Doll” and scroll down you’ll find even more creepy ideas such as: Animated Terror Clown, Light-Up Mourning Zombie Baby with Sound Effects, Light-Up Bonnet Baby with Sound Effects, etc.

Amazon

Amazon is expected to grab the largest share of Halloween related purchases. Not surprisingly, their Halloween store is easy to navigate with the key categories at the top. Then featured essentials, costumes sorted by genre so you can quickly scan options you’re interested in. It also has Halloween toys (unusual) and a banner link to “Halloween for Teens.” Plus, Amazon offers safe treats that are free of the top 8 allergens: peanuts, tree nuts, eggs, milk, soy, wheat, fish, and shellfish. Even with Halloween, it seems Amazon offers everything from A to Z.

Grandin Road

While some furniture e retailers dabble in Halloween décor, Grandin Road offers 17 pages of higher end décor you simply won’t find anywhere else. Grandin Road’s innovative thinking was further evidenced when they tried inserting pop up Halloween stores in Macy’s two years ago.

Get Social

Pinterest is a favorite go-to site for costume ideas. In fact, 27 million Pinterest users pinned Halloween content last year. 17% of all costume buyers used Pinterest for ideas, up 133% since 2012. So? Well, Millennials are in their prime Halloween costume buying years and they are heavily influenced by peer recommendations.

Finally, remember Halloween is $9 billion opportunity! Start planning now for next year. Do your homework. Find out what others are doing. Get creative. Don’t be afraid to think outside the coffin. Take a stab at something different. As long as you give it your best shot, no one will say boo.

By purchasing Whole Foods, many believe Amazon will transform the retail grocery industry. But this business has become extremely sophisticated, intensely competitive and powerful new competitors like Lidl are entering the U.S. market. With the purchase of Whole Foods (1.2% market share), Amazon will still have less than 2% of the market share of U.S. grocery retail sales. Which means over 98% of groceries are being purchased at stores not named Whole Foods.

Here are four key challenges Whole Foods will face and how Amazon might overcome them.

1. Revenue dip – Over the past two years, Whole Foods has experienced a drop in same store sales as customers have left to find lower priced natural foods at traditional supermarkets. Amazon will likely sacrifice some margin by lowering prices which should help to lure back old Whole Foods customers and entice new ones.
2. Consumers not biting – Online grocery purchasing has never been widely adopted in large part because customers want to see and touch fresh produce products before they buy. Whole Foods could overcome by reminding customers of their high standards for freshness and winning them over by delivering it.
3. Margin crunch – Grocery products have razor thin margins which has always made the added cost of home delivery a major challenge. Whole Foods margins are larger and can better absorb delivery costs. Plus, the option of curb-side pickup can make online ordering more cost effective.
4. Acquiring a taste – High margin brick and mortar retailing on a national scale is new for Amazon. The company has proven its ability to innovate and dominate in the ever changing, hypercompetitive online retailing and now in cloud services.

Walmart started with a smaller piece of the market pie 30 years ago and now controls the largest share of the U.S. food and grocery market at 14.5%. Walmart’s innovative systems and processes reinvented the grocery business. The retail grocery environment today is tougher, but given its insatiable appetite for growth, it’s not a stretch to think Amazon could do the same.