Best Buy (NYSE:BBY) has made another move into the health and wellness business. The retailer has begun selling a selection of connected fitness devices from top manufacturers including Flywheel Sports, NormaTec, Hyperice, Hydrow, and NordicTrack.
This follows the retailer's August purchase of GreatCall, a company that sells health monitoring and other services, mostly to senior citizens. That $800 million deal helped the retailer expand its services business beyond electronics, and it broadened its exposure to a large base of potential new customers.
Connected fitness devices fit well within the chain's core business model: They're electronics, and their buyers generally require service and setup help.
Let's get physical
Best Buy's connected fitness lineup includes stationary bikes, rowing machines, treadmills, and more, costing north of $1,000. Most of the products are between $2,000 and $3,000 -- a price zone where consumers prefer to see and touch what they're buying beforehand. That gives a chain with a large brick-and-mortar presence an advantage over pure-digital retailers.
Best Buy can devote floor space to these products and let consumers get a feel for how they work. The chain debuted the segment on its website, but plans to bring it to 100 stores by the end of this year.
Connected fitness devices also feature access to live and recorded workouts, but to take advantage requires owners to subscribe to the manufacturers' services. No doubt some customers will prefer to have a Best Buy sales associate explain the details of those subscriptions (some devices come with free trial periods), rather than slogging through a written explanation online.
"We know there's a growing intersection between fitness and technology, and no one knows tech like we do," said Best Buy Chief Merchandising Officer Jason in a blog post. "We've promised our customers we'll help enrich their lives, including their health and wellness, by using technology. This is a great example of how we're living up to that commitment."
A changing business model
This product line extension makes so much sense, it's actually surprising Best Buy waited this long to do it. The retailer understands that connected healthcare will be a growing business, and this expands the chain's potential audience beyond senior citizens.
In addition, Best Buy's management seems to understand how to leverage its assets. The retailer has a customer support group, a mobile tech and installation service (Geek Squad), and brick-and-mortar locations. These new products will provide fresh business for all of those groups while capitalizing on its relationship with its customers, and giving them added reasons to visit its stores.
"Best Buy has the physical space, the customer traffic, and the expertise to make a success of connected fitness," GlobalData Managing Director Neil Saunders commented on RetailWire. "It also has access to a slightly older demographic that may not venture into traditional sports or fitness retailers."
For most people, spending $3,000 on a treadmill or spin bike is not a causal decision. Best Buy can help people feel more comfortable about making that call, and also help get the most out of their fitness gear. And in the longer term, the retailer can likely leverage some of those sales into relationships that may eventually expand to include other health or wellness services.