Best Buy’s new merchandise would surprise shoppers. It is beginning to carry about 100 skin-care devices at nearly 300 stores and on its website. In addition, best Buy is giving an extra push to categories such as fitness and furniture.
However, retailers are facing a rough patch. This is because it expects a same-store sales decline of between 1% and 4% in the coming year.
Signs of softening electronics sales were observed. This is because consumers direct dollars toward vacations and social events. For example, Whirlpool missed estimates and saw sales drop 8.3% in North America in the most recent quarter.
Also, Microsoft, which produces Xbox video game consoles, gave a negative outlook for the coming quarter. The NPD Group projected that revenue from consumer electronics in the U.S. will fall by 5% in 2022, 4% in 2023, and 1% in 2024. However, total sales would remain higher than pre-pandemic levels.
The declines follow a record-setting year for the industry in the U.S. with consumer tech sales. This hit almost $127 billion, a 9% jump over the elevated sales in 2020.
Best Buy collaborated with connected fitness products from exercise brands, including NordicTrack and Hydrow, in the summer of 2019.
It rolled out outdoor grills from Weber and Traeger in June and a line of electric bikes, scooters, and mopeds in August. It also took over Yardbird, a direct-to-consumer outdoor furniture company, for an undisclosed sum in November.
Best Buy also bought health-care companies, including GreatCall, which sell devices and services that help older adults age in their own homes.
An equity research analyst for retail at D.A. Davidson, Michael Baker, said that adding merchandise groups fit with the company’s history.
He said that Best Buy could stay on the leading edge and expand its total addressable market. It can also capture a larger share of consumers’ disposable income. His price target for the company is $135. This is about 46% above where shares are currently trading. Baker stated that moderating sales may free up time and allow Best Buy to get creative.