Best Buy's CEO: What Consumers Really Want This Holiday Season
People are understandably cautious about the economy – and their own wallets – as we head into this year’s holiday season, but “value” does not equate only to “lowest price” for most customers.
I believe (and arecent survey by The American Consumer Institutebacks me up) that a knowledgeable staff, quality and choice are just as important as price for most customers, and more important for many of them. People want to know that they have access to the lowest price, but that’s just a starting point for them… and “table stakes” for a retailer like Best Buy .
Consumer electronics is a major force in the US economy.
Factory sales are estimated to be about $165 billion in 2009, and the average American household spent about $1,229 over the past twelve months, according to the Consumer Electronics Association (CEA).
And CEA’s Holiday Forecast predicts that four out of five adults plan on buying CE products this holiday season, with consumer electronics making up 29% of total gift-giving.
The American Consumer Institute study provides an interesting glimpse into the mindset of these shoppers. Fully 85% said that product quality was the most important factor when shopping for electronics products. Having access to knowledgeable staff (77%) and being able to find someone to help (74%) came next. Trailing this list was lower prices, at 70%.
These numbers might be surprising to some, but they’re right in line with how we see the consumer electronics industry, and how we think about our customers. Devices like cell phones, computers, digital cameras and internet-enabled TVs provide people unprecedented access to what we call the “connected world” (which I can sum up with one anecdote from my own life: I can watch the same basketball game with my three sons and talk live with them about it, even though I’m traveling half a world away, thanks to innovations like Slingbox and Skype). But these devices are also becoming increasingly complex, and shopping for them can trigger anxiety and “techno-stress.” So it’s not surprising to me that customers want help from someone they can trust when they’re shopping for this kind of technology.
But let me clear: price might not be the number one consideration for consumer electronics customers, but it still matters.
Here again – perhaps counter-intuitively for some – a knowledgeable staff is a tremendous asset. Let me explain what I mean. Customers want to be able to compare prices, but it can be very difficult to do that with confidence when you’re shopping for consumer electronics. Product displays might list SKU and model numbers and “speeds and feeds,” but unless you’re really comfortable with the “language” of technology, it’s hard to know for certain that you’re comparing apples-to-apples, without help.
On top of that, some of the most compelling products and services are not the off-the-shelf variety. A good example is the “smart phone” that is becoming the primary, or only, computing device for more and more people. Very simply, people need help to find the right phone, get it set up correctly and get the most out of it. And it’s not just phones. In every category, we’ve just begun to scratch the surface of what technology can do for people, but with every new development comes a new layer of complexity.
Because of this reality, the definition of value is evolving for people shopping for technology. Competitive prices will continue to be important table stakes, especially in this economy, but people value retailers who will work with them to make technology work for them.
You should be happy with what you purchase. This means that the product works the way you expect it to before you walk out of the store, or when you get home. If not, you’ve overpaid at any price.
Brian Dunn is the CEO of Best Buy Co., Inc. Dunn was named CEO on June 24, 2009, prior to that he had been the company’s president and chief operating officer. Dunn joined Best Buy in 1985.