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Best Buy's (BBY) New Membership Program to Attract Customers

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Consumers’ shopping preferences underwent many changes this past year, thanks to the pandemic. Retailers like Best Buy Co., Inc. (BBY - Free Report) are resorting to prudent strategies to continue attracting and retaining traffic. In a corporate blog, dated Apr 7, Best Buy informed about piloting a new membership program — Best Buy Beta. The membership program offers a wide array of benefits, the highlight being free shipping with no minimum order requirements. Let’s take a closer look at this latest development.

New Membership Program to Boost Competitive Scope

The new membership program includes features such as unlimited Geek Squad technical support, exclusive member pricing, free standard shipping and delivery, and free installation on a wide range of products as well as appliances. Moreover, the program offers up to two years of protection on most product purchases, including AppleCare services for Apple Inc.’s (AAPL - Free Report) products. Services also include a 60-day extended returns provision. Members can also avail an exclusive concierge support through phone, chat, email or through the Best Buy app.

The membership fee stands at $199.99 a year or $179.99 a year for Best Buy credit card holders. This pilot program is currently available at select stores throughout Iowa in Oklahoma and in eastern Pennsylvania. The company plans to expand the membership program to select stores across Minnesota, North Carolina and Tennessee in April. By then, the program is expected to be available in about 60 stores.

According to industry experts, the company’s Best Buy Beta program is competitively positioned against, Inc.’s (AMZN - Free Report) Prime and Walmart Inc.’s (WMT - Free Report) Walmart+ programs, which have been massively popular.

During the pandemic, consumers were seen to shop heavily for electronic products to meet work-from-home, remote schooling and other stay-at-home needs. This turned out to be a significant advantage for Best Buy, known to be a premier destination for electronics. Market pundits opine that the company’s latest membership program serves as a tool for retaining customers acquired during the pandemic and thereby covert them into long-term customers. Moreover, the program’s attractive shipping and delivery offerings are likely to rake in higher online traffic and revenues.  

Additionally, Best Buy informed that its existing membership programs, Total Tech Support as well as My Best Buy points program continues to be available.

Wrapping Up

Best Buy, in its last earnings call, highlighted that for fiscal 2022, enterprise comparable sales are likely to range between a decline of 2% and growth of 1% year on year. This Zacks Rank #5 (Strong Sell) company’s top-line view is based upon the assumption that consumers will resume or accelerate spending on areas that were slowed down during the pandemic such as travel and outdoor dining, especially in the back half of the year.

While the society is gradually going back to the old-normal, thanks to the roll-out of vaccines, companies are striving to identify prudent tactics to stay afloat in a post-COVID world. Best Buy’s latest move to launch a new membership program resonates with such a thought. The attractive perks associated with the program are likely to encourage customers to continue shopping for their preferred electronic devices at Best Buy.  Moreover, the company’s prudent efforts to boost omni-channel capabilities and strategies such as “Building the New Blue” for attaining overall business growth and efficiency are encouraging.

Shares of the company have increased 8% in the past three months, compared with the industry’s rise of 33.1%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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