Best Buy, Amazon, and Walmart all see future growth in service sectors that may seem outside of ... [+]
There has been a significant adjustment taking place, over the last couple decades between the product and service industries. In 2002 product retailing made up the majority, 53.2% of physical retail; the numbers have been shrinking ever since. Today, service tenants make up 52.6% of U.S. retail space, while product-based companies make up 47.4% of leasable space. One need only look at the run-of-the-mill strip mall to see the plethora of nail salons, exercise/fitness facilities, local spas and walk-in-clinics as an example, and there is every reason to believe the trend will continue.
Retailers Look to Services
A cursory examination of where some leading brands are investing gives clues to where their growth lies, and it is clearly in the service sector. Best Buy has had tremendous success with both their Total Tech Services, and their growing In-Home Advisors program which has helped advance the smart and connected home. It has also helped build and refine protocols on in-home services. They all trace their origins to Best Buy’s highly successful Geek Squad that became transformative for the retailer.
Aging in Place
Best Buy has also made a series of inroads into the healthcare technology sector with their GreatCall, a major healthcare technology company and Critical Signal Technologies, which provides personal emergency response and telehealth monitoring for seniors. There are likely to be many ripple effects of the current COVID-19 disease outbreak and its implications for the most vulnerable in our society. It’s reasonable to assume that companies like Best Buy may respond accordingly.
For retailers in search of “added value services” there are a litany of potential support offerings designed to keep our aging population independent, protected, and able to remain in their homes for as long as practically possible. This will have the added benefits of lessening the strain on families as well as our fragile healthcare system.
Retail Healthcare
We are seeing large tech companies like Google, Apple and Amazon all expanding into healthcare services. Amazon has an entire healthcare group that will help providers analyze data in real time. Additionally, I would expect their purchase of Pill Pack to be just an opening salvo in an ongoing movement into other health service and wellness offerings, that could ultimately yield major revenue and profit.
In September last year, Walmart launched its first Walmart Health Center in Dallas, while simultaneously announcing its plans to become “America’s Neighborhood Health Destination.” The Center is offering a whole suite of services including primary care, dental, labs, X-rays, and counseling, at very reasonable rates. Medical check-ups run $30, teeth cleaning costs $25, and mental health consultation runs $1.00 per minute, without insurance. This compares quite favorably to the average uninsured doctor’s visit of $160.00, according to a Johns Hopkins Universities School of Public Health estimate.
The public’s attitude toward consuming these kinds of services at Walmart, or the over 1,300 CVS Minute Clinics, many found with-in Target stores will quickly change. With the government’s announcement of COVID-19 testing, soon to be taking place in Target and Walmart parking lots, we will begin to see entirely new health delivery methods taking place. And even after we get through this most disruptive and agonizing chapter in our history, we will begin to become accustomed to new product and service delivery methods both public and private, which may have been unimaginable in times past.
Bring it Home
We have entered uncharted territory in an era of “social distancing”, that is likely to create an increased demand for e-commerce, BOPIS and home delivery services. It’s likely that people that have not yet begun purchasing groceries online, may begin doing so. Additionally, for the masses of us who have already been “primed” by Amazon, I would expect orders to become larger and more frequent.
There is likely to become greater demands for local last-mile delivery services as well. As calls for Uber and Lift begin to subside, it is quite likely that many of these drivers will go from moving people to moving stuff. Expect the value of used vans and Sprinters to spike.
What’s most important in these troubling times, is that we will get through this together. While it’s true that the new normal may be “different” than the past, we a very adaptable and resilient people. Remember, laughter keeps the immune system healthy.
