The deal makes it a strategic fit to Best Buy’s 2020 strategy of transforming from an electronics retailer to tech-related products and service offering provider. It’s becoming inevitable for big-box retailers like Best Buy and its peers to tackle the onslaught of Amazon (AMZN), changing shopping habits and the evolving needs of consumers. GreatCall deal is expected to augur well to boost the Best Buy’s top and bottom line in the near future.
Targeting the seniors makes sense for Best Buy, which estimates there are 50 million people who are aged 65 and above, and this target market is expected to jump 50% in the next two decades. The burgeoning market size would help Best Buy to broaden its services which would ease pressure on revenues and margins coming from the traditional sale of electronic products that offer meager margins.
Healthcare space has been creating a lot of buzz of late witnessing many surprise moves in 2018. To put things in perspective, health care spending in the US is estimated to be above $3 trillion in 2018. In addition, the industry is well-known for its complex nature and inefficient resulting in high costs which offer new players an opportunity to offer affordable services in a transparent manner.
Related: Study says Americans spend more on healthcare
Earlier this year, three reputed giants Amazon (AMZN), JPMorgan (JPM) and Berkshire Hathaway (BRK.A) announced their foray into healthcare space to reduce increasing healthcare-related expenses. In July, they jointly appointed Atul Gawande as the CEO of the new venture. Amazon (AMZN) made its entry into online pharmacy space in June 2018 by acquiring PillPack. With huge market opportunity, more announcements can be expected from companies to dabble in the healthcare space in the impending days.
Best Buy expects the deal to be closed in the third quarter of fiscal 2019 and forecasted to give a fillip to profits by fiscal 2021. The stock price of the retailer has increased about 14% in 2018 and 30% over the last 12 months.