Best Buy takes electric vehicles for a spin
Customers who walk into some California Best Buy stores for a cellphone might walk out with an electric vehicle. At least that’s the thinking behind a test being conducted by the nation’s largest consumer electronics retailer.
In May, the Richfield, Minn., company quietly began selling electric bicycles, scooters and Segways at 21 of its West Coast stores, 12 of them in California.
This month it will broaden its electric vehicle offerings with the first electric motorcycle to be sold in a brick-and-mortar store -- the Enertia by Brammo Inc., an Ashland, Ore., company in which Best Buy Co. Inc. has invested $10 million.
While the U.S. economy is uncertain and electric vehicle technology is in its infancy, Best Buy is hoping to get in on the ground floor of an emerging market category that not only builds on the company’s technology orientation but also subverts the traditional dealer-distribution model for motorized transportation.
In addition to selling electric vehicles, Best Buy’s technology service group, the Geek Squad, has been trained to service them.
“Our business is already connecting in people’s homes and lives with technology, appliances and computers,” Best Buy spokeswoman Kelly Groehler said. “One of the things that’s important for the future growth of [our company] is staying ahead of where technology is in people’s lives.
“There’s a transition that’s taking place in personal transportation. With people looking to be more fuel-efficient, they want to save money and get around more easily for less cost. What we’re seeing now is a groundswell with the general consumer examining electric transportation for their lives.”
Eight models of electric vehicles are available through Best Buy’s participating stores and its website. The vehicles include scooters from Currie Technologies, bicycles from Currie and Ultra Motor Ltd., a Baja Motorsports moped and the Segway i2.
When the Enertia motorcycle joins the lineup this month, it will fill out a model range that varies widely in price ($299 to $11,995), speed (12 to 55 mph) and distance per charge (eight to 45 miles).
“The biggest thing we get out of the deal is much better exposure,” said Larry Pizzi, chief executive of Currie Technologies, the California electric bicycle manufacturer that makes five of the electric vehicles Best Buy offers.
Currie bicycles are also sold through independent bicycle dealers, where the company “fights an uphill battle” to be embraced by traditional bicyclists, and at other big-box retailers such as Wal-Mart, Toys R Us and Target, where “we’re jammed into a slot where you’d normally find a conventional bicycle and are usually the most expensive one on the floor,” Pizzi said. “Best Buy is great exposure for our brand but also great exposure for the category. We’ve got a ways to go before electric vehicles are recognized as a mainstream product.”
The floor at the West L.A. Best Buy backs up Pizzi’s point.
“It’s a new department, so it’s kind of slow,” said Jackie Martinez, the sales associate in charge of electric vehicles there. The store sells the Baja Motorsports moped and Currie Ezip and Izip scooters and bicycles in an area that sits between refrigerators and ovens on one side and Xbox and PlayStation 3 gaming systems on the other.
Test rides are available in the parking lot, just outside the store’s car-stereo installation bay.
“Most customers see the bikes for the first time when they walk in the store. People aren’t sure how to take it, but they’re definitely really excited. They ask a lot of questions,” said Martinez, who has sold eight EVs in the month her store has been offering them.
Best Buy stores in Long Beach, West Hollywood, Westwood and El Segundo also carry electric vehicles as part of the company’s test. The Burbank store will start this month.
Model selections vary by location, as does the level of support. Some stores have a computer consultation desk for consumers to comparison-shop electric vehicles with pedal-powered or internal combustion products.
Each location and its EV sales associates have had to acquire dealer licenses to sell motor vehicles that require state registration, such as the Brammo Enertia.
“Best Buy is looking for a natural extension of what it already does,” said Michael Pachter, research analyst at Wedbush Morgan Securities in Los Angeles. “The company has always been a consumer electronics store. These vehicles are arguably consumer electronics. They’re selling to the same consumer,” who are, for the most part, males ages 24 to 49, Pachter added.
The consumer electronics chain saw sales increases in laptops and cellphones in the first quarter of 2009 compared with the same period last year, but those gains have been offset by declining sales for digital cameras, appliances, video games and movies.
As categories such as CDs and flat-screen TVs become less profitable and more competitive, “Best Buy will have the space, so why not devote it to cool and innovative products? It’s part of the natural evolution of their business to constantly refresh their product mix to keep their customers engaged and satisfied,” Pachter said.
Will Best Buy be selling electric cars once more manufacturers make them available to the public at affordable prices? “We’re looking at every option right now,” spokeswoman Groehler said. “It comes down to consumer likelihood to adopt EVs in their lives and our ability to meet that demand. Starting with e-powered bikes gives us a healthy read on that.”
Groehler wouldn’t comment on the success so far of the EV test or predict how long it would last. “It depends on the reaction,” she said. “It could go a few months or a couple years.”