Customers are waiting on November 23, 2020 outside a Best Buy store in downtown Toronto, Ontario to upload their online orders.
Geoff Robbins | AFP | Getty Images
Best Buy is testing a new annual membership program that includes fringe benefits such as technical support, free delivery, and extended warranties on smartphones or other purchases.
The consumer electronics retailer said in a corporate blog post on Wednesday that the program is available at some stores in Iowa, Oklahoma and Eastern Pennsylvania. Later this month, it will expand to stores in Minnesota, North Carolina and Tennessee. By the end of the month, it will be launched in about 60 stores.
The program, called Best Buy Beta, costs $ 199.99 per year or $ 179.99 per year for customers who have the merchant’s credit card.
Best Buy’s sales have risen over the past year as consumers bought technology to work, go to school and spend time at home during the Covid pandemic. Sales online and in stores that have been open for at least 14 months have grown by 9.7% in the most recent financial year, which ended on January 30, compared to the previous year. However, sales growth slowed sharply from 23% in the third quarter to 12.6% in the fourth quarter.
The retailer expects the rate of growth to slow further, especially after a year of exceptionally high sales. CFO Matt Bilunas says sales in the same stores will range from a 2% drop to a 1% profit. He said Best Buy expects more people to spend money on dining out and traveling again.
With the membership program, Best Buy hopes to drive sales beyond the pandemic and win more customers’ wallets. It follows the playbook of competitors, including Amazon and Walmart. Walmart launched its own program, Walmart +, last year with benefits such as unlimited delivery of groceries and discounts on fuel. It costs $ 98 a year. Amazon Prime has gained more than 150 million paid members around the world over the past 15 years with free, fast deliveries and a large library of TV shows and movies. A Prime membership is $ 119 per year.
The benefits of Best Buy are tailored for technology. Customers who join the membership program receive unlimited technical support from the Geek Squad, concierge service 24 hours a day, exclusive membership prices on merchandise and free installation of many devices and products. They also get two-year warranties for most purchases, including Apple products like iPhones.
“While we want to develop our membership programs, the goal of Best Buy Beta is to create a membership experience that customers will love and to make them feel confident during their relationship with Best Buy,” said Allison Peterson, Best Buy CEO on the company’s website.