The surprise Best Buy acquisition of GreatCall marks the electronics retailer’s first takeover in more than six years.
Best Buy will spend US$800 million on GreatCall, one of the US’ largest providers of communications technology aimed at helping older adults live independently and more safely in their homes.
San Diego-based GreatCall now has 900,000 subscribers to its service, which uses mobile technology and easy-to-handle devices to connect older adults with family members or with trained call centre operators who can answer questions or call emergency personnel if necessary.
The move marks a strategic move away from Best Buy’s core retail business at a time when electronics has become much of a commodity market with thin margins and widespread online competition.
Neil Saunders, MD of GlobalData Retail, says the investment marks “a logical evolution” for the company.
“Over recent years there have been significant changes to the electronics market, including fierce competition from the rise of online. However, Best Buy has successfully navigated this new landscape – in large part because it has adapted its proposition and approach.
One of the main changes has been the move from simply selling products to trying to help consumers select and get the best use out of new devices. In a sense, Best Buy now sees its role as helping consumers to improve their lives through technology.”
Saunders says GreatCall gives Best Buy a relevant service, driven by technology, that it can offer to consumers.
“In our view, it also helps counterbalance the pressure on both sales growth and margins of electronics products. The focus on health, and in particular health services aimed at the elderly, puts Best Buy squarely into a market with high demand and strong growth. Moreover, we see this as a good fit as Best Buy is a known and trusted brand name among older shoppers. This should enable the company to grow the GreatCall service.”
Saunders said that long term, the move should be seen as part of Best Buy’s continued adaptation to a provider of services rather than a pure retailer of things.
