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Alexa Back

Can Best Buy Take on Amazon With Its New Store Concept?

New store formats are not unheard of. 

Amazon (AMZN) has given it a try with its Amazon Go and Amazon Fresh. Amazon Go operates with no cashiers or self-checkout stations, and instead the average shopper walks in, picks up items, puts them in their shopping cart, and walks out. The charge is automatically applied in their Amazon Go app (which is linked to one's Amazon account) through cameras and weight sensors. 

Amazon Fresh operates as a delivery service for Amazon Fresh and Whole Foods Market orders. Amazon Fresh users can also order groceries online for delivery as quick as two hours later or pick them up. 

But what happens when this same idea is applied to technology? 

Best Buy Creates a Small Format, Digital-First Store

Best Buy's New Digital Store

Best Buy

Following in Amazon's footsteps, Best Buy (BBY) sent out a press release on July 25 unveiling a new store model: a small format, digital-first store. 

The store will be 5,000 square feet and will open on July 26 in Monroe, North Carolina. The store will carry Best Buy products, offer expert services like Geek Squad (Best Buy's equivalent to Apple's  (APPL)  Genius Bar), and pick-up. Best Buy calls it a "new digital-first shopping experience that encourages customers to do everything from shop, select your product and get advice digitally while in the store." 

Best Buy also announced in the press release that it will be investing in its stores "to better serve our customers’ needs in an ever-growing digital world and create a more seamless shopping experience."

The store will greet customers with a 7-foot-tall digital display highlighting new items and an introduction to how to shop. Some of the new information will entail:

1) Just scan it: Products will be on display for those to use and see. When a customer decides to purchase the item, they can scan a QR code and go to the pickup counter to retrieve it. 

2) Mobile Self-Checkout: The store will contain grab-and-go items such as cell phone cases, gift cards, and charging cables. With the Best Buy app, customers may purchase these items instantaneously. 

3) Get expert advice: Customers who seek help in-store will have to use virtual means of communication, such as chat, call, or video chat. Blue Shirts will also be in the store to assist. 

Can Walmart, Amazon, and Target Compete?

Amazon's physical grocery stores Whole Foods Market, Amazon Go Grocery, Amazon Fresh, and Amazon Go brought Amazon $4.2 billion in revenue in 2021, which is a 10% increase from $3.77 billion a year prior.

People shopping at an Amazon Go store

Spencer Platt/Getty Images

More retailers are experimenting with digital ordering and pickup to save the customer time, and many seem to prefer it. Target has seen such positive response with its Drive Up service, originally developed as a response to help people get what they needed during the height of covid, that it announced plans to expand it this year, adding returns and Starbucks (SBUX) drink delivery to the menu.

However, Target (TGT) and Walmart WMT have yet to experiment in this area, foregoing the digital-first option in favor of other approaches.

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