Baby boomers may not be the largest demographic for much longer, as millennials are expected to overtake them by 2019, according to estimates by Pew Research. Still, at more than 74 million and 22% of the U.S. population, boomers are a lucrative market for retailers.
Best Buy (NYSE:BBY) recently announced it was purchasing GreatCall -- the company behind the Jitterbug cellphone -- for $800 million, making it the largest deal in Best Buy's 52-year history. GreatCall focuses on larger buttons and a brighter screen to produce a phone that appeals to older consumers.
This largely under-the-radar acquisition is a way for Best Buy to leverage the aging population in an increasingly technology-centric world.
GreatCall's Jitterbug phone targets seniors with bigger buttons, larger screens, and simpler menus designed to appeal to older consumers. The devices also provide other customized features geared toward senior users, including a more powerful speaker, backlit keypad, and yes/no menu buttons that are easier to navigate. One of the more appealing features is the 5Star emergency response button, which contacts highly trained agents if the user needs assistance.
The company not only provides a less intimidating, senior-friendly phone, but also offers a number of health and wellness services aimed at the older generation. Reminders to take daily medication and order refills, weekly wellness calls, daily check-ins, brain games, and daily lifestyle and health tips are just some of the services geared toward older subscribers. The company also provides wearable emergency response devices that can contact help in the event of an accident.
There are currently 50 million Americans over the age of 65, a number that is expected to increase by more than 50% within the next 20 years, according to Best Buy. GreatCall currently serves only 900,000 nationwide subscribers, leaving a largely untapped market for its services. The company is already profitable and producing annual revenue in excess of $300 million.
Best Buy says this is a manifestation of its Best Buy 2020 strategy, "specifically focused on addressing the growing needs of the aging population with the help of technology products, services and solutions." The company sees this as an initial incursion into the elder and healthcare market, where it can "address the needs of aging consumers, their caregivers, payers, and providers."
Ultimately, Best Buy wants to get older consumers in the door with its Jitterbug phones and provide assistance with other technology and electronics products and services. The ability to leverage health technology and offer support to the demographic that needs it most is a growing opportunity. "We think it's a completely white space that is waiting to be captured," said Hubert Joly, Best Buy's CEO. The company also recently appointed Cindy Kent, a seasoned healthcare executive, to its board, further highlighting its push into the space.
These developments follow Best Buy's announcement last year of its Assured Living service, which provides a line of smart-home sensors and controls designed to help loved ones keep track of the health and safety of senior family members.
Staking its claim
By entrenching itself in the lives of older customers, Best Buy isn't just serving a largely untapped technology market; it's increasing the likelihood that they'll turn to the retailer with other electronics and technology needs. It's also creating a larger pool of potential customers for the Geek Squad, and for the Total Tech Support program, which charges $199 per year for unlimited Geek Squad support -- online, in-store, and via the Best Buy service app.
Each of these programs forms an ongoing connection with a growing list of consumers. By inserting itself into their daily lives, Best Buy is achieving one of the holy grails of retail -- ongoing recurring revenue.