Housewares & Healthcare: Inside Best Buy’s Retail Reinvention

Quick—what comes to mind when someone mentions Best Buy? With close to 1,200 locations spread across North America, the big box brand is hugely recognizable. But as retail evolves, so to must the biggest names in the business. Best Buy’s innovations focus on redefining the notion of traditional customers, and what’s left on the other side is a company focused not on electronics, but consumer relationships and wellbeing.

Evolve or get out of the showroom

How do you turn a brick-and-mortar giant into a digital retail leader, all while taking advantage of existing sprawling infrastructure? As the SVP of e-commerce and information technology for Best Buy Canada, this is the question Thierry Hay-Sabourin has been answering for over a decade.

“We’re transforming our organization from a transactional big retail company that is moving a lot of boxes to a company that is trending towards a service mindset and a relationship business with our customers,” he says. “That is fundamentally the largest change in how we view our business.”

That kind of shift is no easy feat. With over 80 per cent of Canadians within a 15-minute drive to a Best Buy, the brand already has deep market penetration. But the company wants to do more than sell technology—Best Buy wants to be the technology improving the lives of every consumer. Forget big boxes—Best Buy wants big bonds.

Enter “Total Retail,” a concept that Best Buy hopes will improve the customer relationship, regardless of how those customers interact with the retailer.

“Our customers don’t see channels. Customers just see interactions with Best Buy,” says Hay-Sabourin. “When they visit us in stores, or online, or call us, it’s the same. Total Retail removes the word ‘channel’ from our vocabulary and ensures that internally we don’t create silos.”

“The idea of a pure play model is dead. It was dead in 2016. Anyone that’s just online, or just brick-and-mortar, it will be difficult for them to meet customer expectations in the long-term. You see it with a lot of digital startups that are now opening stores.”

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Inside one of Best Buy’s fulfillment centres.

The world’s biggest e-commerce companies are now entering the physical world. Amazon is opening real-world locations and could have over 3,000 cashierless shops open by 2021. Mattress-in-a-box startup Casper conquered their digital sector and are now set to open over 200 physical locations by 2022. In fact, a recent Hero study found that 67 per cent of e-commerce brands that have received over $6 million USD in funding have opened physical spaces in the past few years.

“It’s taking the values we’ve had since our inception in the online environment and bringing them into the physical world,” says Nicole Tapscott, the GM of Casper Canada and the person responsible for overseeing the company’s expansion north of the border.

“The extension is that it provides us with tremendous local awareness with this kind of consistent on-the-ground presence, so we continue to build these long-standing customer relationships.”

This shift towards a blend of retail channels is why Best Buy can quickly innovate their business model—they have a large online presence with 18 million monthly visits to BestBuy.ca, huge showrooms, and a 99 per cent rate of brand awareness. This allows them to tap into a prime advantage of the physical and digital retail world: fluidity of inventory.

“To have a culture that doesn’t put one channel against the other is half the battle,” says Hay-Sabourin. “But it also allows us to roll out initiatives like one we did a few years ago called ship from store. We use our stores and the inventory that was once locked to one location to now be available to a national audience. Our entire infrastructure is now based around if a single piece of inventory is available anywhere.”

If a product is out of stock, in-stock at another store, or only available online, in-store staff can access it through their POS system and have it shipped to the customer or the store itself, all while still getting credit for the sale. With that comes a thorough logistics system—35 per cent of orders are shipped the next day, and 70 per cent within two days – all for free.

For Casper, the approach to blending channels is very similar, despite a completely different launch and growth pattern when compared to Best Buy.

“Since the beginning, we’ve always had this omnichannel mentality, meaning we want to be where people feel most comfortable trying and experiencing our products and brand,” says Tapscott.

“E-commerce will always be our flagship and a key focus of what we do. As we move into the retail space, we’ll be thoughtful and selective of where we go. We’re not in the business of opening stores just to open stores.”

Toto, I have a feeling we’re not in Best Buy anymore

When it comes to the “pick up in store” model, that kind of blended service is now commonplace, at least for the largest retailers in North America. To distance themselves from both e-commerce and brick-and-mortar retailers, Best Buy is expanding the scope of their services by heading into the homes of customers.

“We have an infrastructure that allows us to meet this wide range of needs for our customers,” says Hay-Sabourin. “I think every type of Canadian shops with Best Buy, so being able to answer the customer’s need, on their terms, when they want it and how they choose to interact with us, that’s our operating model.”

And believe it or not, for Best Buy, that means getting into healthcare.

“The population is aging,” explains Hay-Sabourin. “We have more and more customers that are helping their parents as they transition into a senior lifestyle, and we believe there is an opportunity there for technology to help improve the lives of both the aging population as well as their children who want to live a happier life at home.”

This service, called Assured Living, is currently in a pilot phase and is one of the latest examples of how Best Buy is working to sell customer relationships instead of shiny gadgets. The company developed proprietary technology that allows their network of reps—the Geek Squad—to install sensors and smart devices in customer’s homes. From there, Assured Living reps learn about the habits and patterns of the house. For example, if mom takes her meds three times a day, and happens to miss two of those in one day, an alert is sent to a caregiver to go and make sure everything is okay.

Best Buy made the jump to healthcare when they acquired GreatCall in the middle of 2018 for $800 million USD. GreatCall is a mobile device and emergency call service that connects seniors with caregivers. With that move, Best Buy also appointed Asheesh Saksena as president of Best Buy Health and brought in two veteran healthcare execs to their board of directors.

A service like Assured Living can cut down on costs involved with caregiving, medicine and even transportation, but more importantly, “Help customers live a better life in their home and gain independence they would have lost otherwise,” according to Hay-Sabourin.

Best Buy is beginning to roll other “relationship services” out as well. Many are familiar with their Geek Squad, which can install technology in a customer’s home. But a new service called Total Tech Support allows customers to pay a monthly fee and have Best Buy troubleshoot every piece of tech in their home, even if it was not purchased from the retailer. It comes with a suite of other features like cybersecurity packages, cheaper repairs, and dozens of computer and connected car services. Total Tech Support plays into the fast-rising ubiquity of IoT devices in the home.

“As the number of connected devices explodes, it’s very important to have a strong network into your home,” says Hay-Sabourin. “If a customer has technology, it will be serviced and taken care of by Geek Squad, whether they bought it in Best Buy or not.”

Total Tech Support is an example of the synergy shared between Best Buy Canada and their U.S. parent company. The idea for it began in Canada and was eventually rolled out across North America, as the two sister companies constantly share best practices and work on innovating retail together.

Internal shift, external success

Over the past couple of years, the massive Best Buy—which is based in Minnesota, with the Canadian subsidiary headquarters in Burnaby—has been tinkering with internal structures to better reflect a vision of comprehensive retail.

The e-commerce and digital arms work closely together, bringing in experience design, content, and even the company’s recently launched third-party marketplace all within one team. Often, companies will keep their e-commerce technology team and corporate technology teams separate, but Best Buy has combined them as well.

Hay-Sabourin will be the first to say that these kinds of internal decisions are very deliberate. Not only do they foster growth in the short-term, but they also help to future-proof Best Buy as they look to remain agile.

“Because the pace of change has never been this fast—and will never be this slow again—I need to make sure we can build a resilient organization that can deal with change at a fast pace,” he says.

“To do that, we started to transform our company and create cross-functional teams that are empowered to make decisions. Not only that: They are expected to make decisions, and fast.”

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Best Buy’s in-home advisor program, the “blue shirt network.”

The Total Retail model fits into this internal shift as well. Because Best Buy is working to win customer relationships above all, instead of focusing on individual channels, there is no incentive to maximizing one part of the organization over another. “As long as the customer shops and interacts and maintains a relationship with Best Buy, everyone is happy,” says Hay-Sabourin.

In order to achieve a workflow model that can scale as fast as retail changes, the company has abolished every manager role in the e-commerce and technology groups. In response to that, Hay-Sabourin and his team created over 95 mechanisms to structure how work is done without the need for a manager. Instead, each employee has a coach. It’s not just a fancy renaming of a typical role either; this actually involves coaching.

“Think about the type of organization we need to be when the world is always changing,” says Hay-Sabourin. “You want people that are also changing their skill set quickly. Our folks need to continue to learn new skills in order for us to innovate.”

With each coach comes a structured program to continually learn new skills. That model sets the pace for each employee to ensure that their particular role is never scaled out. They learn and adapt, just as Best Buy’s own retail and business model is doing.

Equipped for the future

A big part of learning on the job is keeping up to date with the best available tools. Best Buy Canada launched a third-party marketplace three years ago as one of their first steps towards expanding relationships with customers. To develop that experience, Best Buy Canada reached out to Mirakl, a company that specializes in building product catalogue platforms.

Best Buy Canada has also been a Salesforce customer for just over a year, using the CRM platform to connect their stores to customers in ways they could have never done before. Partnering with industry leaders also helps Best Buy Canada remain agile so they can focus on improving their own platform.

“We select partners that are as innovative as we aim to be, and that are helping shape our thinking or helping accelerate what we want to do,” explains Hay-Sabourin. “It’s this idea that we can work with a company like Salesforce that enables us to get faster at building the relationships we want with customers.”

“The model has evolved,” continues Hay-Sabourin. “In the past, a company might build the tech that enabled them to reach more customers. Now, in order to be as fast as we can, we find a partner like Salesforce, a world leader in the space, take their tech, and get up and running quickly. Tech is not a back office idea—it’s how the work gets done. Therefore we need to have the right balance between the buy and build aspect by selecting really innovative partners that shorten our time to market.”

With arms into healthcare, tech support, and a marketplace that sells almost anything a customer may want, Best Buy has clearly moved past being a simple retailer. They are now in the business of making their customers’ lives easier. But the future still holds a few ways to evolve, and it centres around being accessible.

The retailer is testing voice technology and pioneering different ways to utilize their infrastructure and change how customers shop. A consumer can reserve a product through their Google Home or a similar assistant, then go to a store and pick it up. Best Buy Canada is also piloting a voice system in a Vancouver store where a digital assistant recognizes typical questions asked over the phone (directions, hours, inventory) and returns answers in a fluid manner.

For Hay-Sabourin and the rest of the Best Buy digital team, every new innovation has to reflect a simple vision.

“It’s important to ground trends back into what matters to customers. Anything that helps to improve convenience, reduce friction, and increase the value customers have when dealing with retailers, these are the areas we’re valuing the most.”