We keep finding more and more rumors related to Google Glass and it is odd to see how some simple speculations can influence people’s decisions or the market share value. For instance, the shares’ value of Best Buy grew up to 4% last week as a consequence to the rumor which claims that the electronics superstore will be selling the soon-to-come Google Glass.
Robert Scoble, the initiator of this rumor and one of the gurus of nowadays technology stated that Google wanted to rent nearly a quarter of Best Buy’s average store space, more precisely 6,000 feet of space. As expected, there were a lot of discussions concerning the feasibility and the credibility of the rumor and Best Buy didn’t wait too long before debunking it. So, as the electronics superstore claims, the rumor is not true.
As you probably know, Apple already has mini-stores hosted by Best Buy. And as recent reports show, the superstore is also planning to launch 1,400 stores of nearly 500 s.f. each for showcasing Samsung’s Galaxy S4, while Microsoft announced a couple of weeks ago that they want to open 500 stores with sizes between 1,500 s.f. and 2,200 s.f.
This partnership is not going to happen for now but if you think about it, you realize that it’s pretty interesting to evaluate whether this business would have been profitable for Best Buy or not, in the eventuality they would consider such a business in the future.
Of course, there is the possibility for someone who entered the store to buy an iPhone, PC or a Samsung Galaxy to stick around and buy some more electronics as well, but it is unlikely for this to happen on a regular basis. So, if the partnership is made on the soul idea of drawing more traffic into the store which could turn into sales opportunities for the retailer, then the deal isn’t worth it. Besides, there are a lot of store-in-store concepts that failed in the past, and as an example we have Target who ended the deal with RadioShack at the beginning of 2013 due to awfully small sales, and afterwards they ended the tech service partnership with Best Buy.
If you take a look at the evolution of the electronics store shares, you will find that their value has tripled this year, mostly because they have been making public loud and clear every successful partnership. We would like to see this ‘big tent’ concept work, as CEO Hubert Joly believes it will, but we will keep our doubts regarding the matter.
The main drive of the retailer was the visible improvement of the customer’s experience, so that it would minimize the effect of showrooms and the sales loss on Amazon and for that, Best Buy’s employees should be some kind of tech gurus themselves. But considering the fact that every little store-in-store keeps a very strict control over pricing and products, the customer isn’t walking in a very relaxed environment at all. And on top of all these, Best Buy might also have to face at some point a certain degree of dilution of its own brand considering that it has turned into a tech shopping center of all electronics.
On the other hand, we should also mention that Best Buy would have had with Google a codependent relationship which could have ended damaging its reputation. Just think about it: for the Google Glass the partnership would have meant a low-cost method for getting the technology to a big number of consumers, but the situation doesn’t look the same from Best Buy’s point of view. The retail store would probably need the search giant more and more in order to keep the same customer traffic in the store.
For Best Buy, there is no guarantee that they would remain on the costumer’s list of shopping places after making such a deal with the search giant, but for now its position remains untouched, if you don’t wait to think about the behinds of such a plan. The electronics retail store left this page blank in the possibility they could fill it up some day (even though Google isn’t very pleased about it). However, the main conclusion we can draw from this event is that such a dilutive relationship would rather do more damage than help.