Best Buy is muscling into the $13 billion fitness industry, but is it training for a marathon or a sprint?
The electronics retailer plans to open dedicated fitness spaces in more than 100 stores by the end of 2019. The workout equipment, which includes tech-enabled and connected spin bikes, rowing machines, treadmills and workout recovery systems, are available online now and will arrive in stores in the coming months.
It’s not Best Buy’s first foray outside of home entertainment systems and appliances, or even into healthy living. The workout commitment is in fact just one leg in a longer race for the healthy consumer’s expanding wallet share.
In August 2018, Best Buy acquired GreatCall, a health-services platform that provides emergency response services for senior citizens. In April, it started selling Tyto Care’s home medical exam kits online and in some stores. And in June, it acquired senior remote monitoring company Critical Signal Technologies.
At-home fitness is a logical next-step for Best Buy, as it extends from senior care to younger consumers and family. And it could prove lucrative: The global fitness equipment market is expected to exceed $13 billion by 2024.
Sprinting Through Inventory
Best Buy describes its fitness mission as deeper than sales; it’s an effort to support the healthcare industry. As Jason Bonfig, Best Buy’s chief merchandising officer, said in a statement: “We’ve promised our customers we’ll help enrich their lives, including their health and wellness, by using technology. This is a great example of how we’re living up to that commitment.”
But a retailer needs sales to make any endeavor work. Whether rowing machines are, or will become, hotter than home entertainment systems is a risk Best Buy has evidently calculated. Here are a few reasons why the move makes sense:
- More people are working out. Americans have increased their participation in almost all physical activities from 2013 to 2019, according to the 2019 Physical Activity Council Participation Report. Two-thirds (66%) of Americans participate in fitness sports, compared with 60% in 2013. Broken down by generation, 55.6% of Gen Z participate in casual or active high-calorie activities; compared with nearly 64% of millennials and 71% of Gen Z. Across all generations, more than half get their activity from fitness sports.
- Obesity rates are starting to decline. They are among children, anyway, and the young are Best Buy’s next consumer base. Obesity rates among preschoolers of government aid declined to 14% in 2016 from 16% in 2010, according to a 2019 report by the Centers for Disease Control and Prevention. The positive impressions Best Buy makes now in terms of wellness could last.
- Wellness is a trillion-dollar industry, and growing. As a likely result of these trends, the wellness industry is expanding in direct correlation to thinning waistlines. Overall global wellness spending was valued at $4.2 trillion in 2017, the most recent year for the figure, representing nearly 13% growth over $3.7 trillion in 2015. Of that, the fitness and mind-body sector of the industry generated more than $595 billion, a near 5% increase from 2015 ($542 billon).
- Fitness now connects us. The expansion of the home fitness market is driven in part by sales of tech-connected gym equipment, such as the Flywheel spin bikes Home Depot will carry. They come with monitors through which users can stream workout classes. The sale of connected gym equipment alone is projected to grow at an annual compounded rate of 31.1% from 2017 to 2023, to more than $1 billion.
Best Buff: Finding Legs In Service?
So when Best Buy states in its annual report that growing its health business is a priority for fiscal 2020, it makes sense that we see it also expanding its house-calling advisors program and tech support.
But there are two key distinctions between selling these services and treadmills: Home exercise equipment is expensive, and it doesn’t necessarily encourage repeat visits.
There is one opportunity, however: Best Buy is connecting its fitness investment to its in-home advisor services, to help its customers “discover, understand and purchase the equipment.” Best Buy’s in-home experts will learn to use the workout gear as well as how to install it in homes, so these house calls could extend to equipment service visits and, possibly, training.
Could the Best Buy Geek Squad transform into the Best Buy Fit Squad? Maybe there’s room for both, if Best Buy is diligent about monitoring its pace. Retail is a marathon.