How Best Buy Could Soon Dominate a $28 Billion Market

Best Buy has a new program known as Assured Living, that uses mobile web and smart home healthcare technology to help adult children remotely check in on the health and safety of aging parents at home. It can provide peace of mind for caregivers and delay the need for an elderly relative to enter assisted living—saving them thousands of dollars a month.

The Opportunity

• By 2020 about 45 million Americans will be caring for 117 million seniors, taking responsibility for food delivery and health monitoring.
• The connected home market is estimated to be worth about $28 billion and is growing roughly 20% annually.
• Three out of four caregivers want to use technology to make their duties easier, but only 7% have done so, according to a 2016 study sponsored by AARP.
• Smart home gadgets are a fast-growing consumer segment. Some 80 million devices were sold globally last year, a 64 percent rise from the year before, according to IHS Markit.
• People are living longer and preferring to stay in their homes—delaying entry to assisted care facilities.

Future Sticker Shock

What makes Assured Living such a huge potential payoff for Best Buy is how much it can save both aging parents and their children. The average cost of assisted living is now more than $3600/month and nursing home care is generally twice that amount. Delaying entry into a care facility could save patients/families $43,000 a year on the low end. Even delaying entry into assisted care for a few months could save thousands. In-home health is a less expensive alternative (average cost of $20/hour), but can also end up costing thousands of dollars a month.

The Assured Living Package

Best Buy sells an entry-level package of digital home health gear for $389.96, installs it for $199 and provides a monthly monitoring service for $29. It starts with a free in-home assessment with families to determine the appropriate monitors and devices. Geek Squad tech workers install the custom-built systems and family caregivers receive information or alerts on their smartphones.

Options range from basic cameras and motion sensors that cost $200 to a range of smart products that can monitor and learn a loved one’s typical pattern of activity and alert caregivers through a smartphone app of unusual changes that may require attention. Those items can cost up to $1,000.

The package also includes pressure monitors to show if the person is still in bed or on the couch. Caregivers can also quietly check to see if their parents locked the front door before going to bed or how many times they got up during the night. Sensors can show whether a parent opened the medicine cabinet or refrigerator that day, and his/her quality of sleep and activity levels, according to Best Buy. Assured Living provides enough information to allow caregivers to continually keep tabs on aging parents without disrupting their lifestyle.

The Lessons for Category Managers

Listen to customers – “The idea for Assured Living was born in response to customers who came into our stores looking for smart home technology to help keep tabs on their aging parents,” says Best Buy vice president of strategic growth office AJ McDougall.

Plant seeds – Best Buy partnered with the Mayo Clinic back in 2011 to create a senior care technology lab. The lab was used for focus groups, designing, prototyping and piloting new services and technologies to better understand the needs of seniors.

Remember your core customers – Baby boomers fueled the growth of Best Buy for decades and continue to do so. A large percentage of baby boomers have aging parents. Best Buy has millions of Reward Zone baby boom customers who they communicate with regularly.

Recognize the opportunity – The sales potential is in the tens of billions for the senior connected home market. Best Buy is uniquely positioned to take advantage. It’s a complicated purchase and Best Buy’s in-store blue shirts can walk customers through the sale and answer questions. Plus, the company’s Geek Squad tech services group can provide installation of all the equipment. What other retailer can do both?

Partner with experts – Assured Living customers can get 24/7 access to Ask Mayo Clinic online, that walks them through questions based on symptoms a loved one may be experiencing, and then delivers personalized care guidance. Assured Living customers can also call a Wellness Line sponsored by UnitedHealthcare which includes access to wellness coaches, senior-focused health education, and referrals to local community resources.

Acquire complementary products/services – With the recent acquisition of GreatCall, Best Buy will have direct access to 900,000 Jitter Bug (senior cell phone) service subscribers. GreatCall also offers mobile products and wearables that connect the user to family caregivers, provide general concierge services, answer service-related questions and dispatch emergency personnel.

Get the word out – Assured Living is a huge opportunity for Best Buy, but it will need to reach out and educate baby boomers. On the plus side, baby boomers have been targeted for years and marketers know how to reach them (especially Best Buy). From direct mail to TV (think evening news) boomers can be targeted efficiently. AARP is helping to get the word out by advertising a 10% discount on Assured Living monthly plans.

Best Buy is an adept marketer and advertiser. But Best Buy may have to look at the size of this opportunity and consider a special and more robust marketing budget dedicated to Assured Living. Why? Unlike razor thin profit margin products like TVs and laptops, Assured Living offers higher margins and monthly revenue streams. If Best Buy can dominate this market, Assured Living could provide the retailer with assured growth for years to come.