TGT Stock – Best Buy Joins the Membership Club. What Investors Should Know.
is joining the lineup of retail giants that have membership programs with its Best Buy Beta. And Jefferies thinks the company could hit it out of the park by nabbing customers from rivals
+ and Target.
Shares of Best Buy (ticker: BBY) were down 0.5% to $119.95 in afternoon trading Thursday. The stock is up more than 20% year to date after rising 81.5% in the past 12 months.
On Wednesday, Best Buy announced it was piloting Best Buy Beta—the annual fee is $199.99, $179.99 for company credit-card holders—in select stores throughout Iowa, Oklahoma, and eastern Pennsylvania; more stores in Minnesota, North Carolina and Tennessee will try out the subscription service later this month.
Members receive special pricing, unlimited technical support, up to two years of protection on most products, free shipping, and free installation of most products and appliances, according to the company’s announcement.
Jefferies’ Jonathan Matuszewski reiterated a Buy rating and a $125 price target, writing that “details of this program are new, but the idea of it shouldn’t come as a surprise to investors.”
The analyst believes the program is a way for the company to “turn the billions of interactions it’s had with new (and reactivated) customers over the past year into lifelong relationships by showing them the full ecosystem the retailer offers through delivery, installation, repair, and technical expertise.”
Matuszewski notes that Total Tech Support members already pay $199 for a fraction of the benefits they would get with Best Buy Beta. Yet, he also thinks the company will set its sights on customers that currently get their electronics through Amazon (AMZN) Prime and Walmart’s (WMT) Walmart+, which are both subscription services, and Target (TGT).
His analysis shows that a third of shoppers who browsed Best Buy online also visited those retailers’ websites in the past three months. In addition, a third of Target browsers, 30% of Walmart browsers, and 22% of Amazon browsers each visited Best Buy in the past three months. “We believe it’s these cohorts of shoppers who have some familiarity and (likely) past purchases with Best Buy who are targets for marketing Best Buy Beta to over time.”
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