Best Buy Weighs Changes to Smart-Home Alliance With Vivint
(Bloomberg) -- Best Buy Co. is re-evaluating its year-old partnership with Vivint Smart Home, according to people familiar with the matter.
The hundreds of Vivint employees who had been pitching connected-home systems inside more than 400 Best Buy stores were let go last month and Vivint products have been pulled from stores, according to people familiar with the decision. Best Buy’s own salespeople and Geek Squad technicians might be tasked with handling smart-home setups going forward, one of the people said. Vivint employees could be involved in those installations, according to one of the people.
“We are continuing to work with Vivint on ways to better help our customers explore, learn about and buy the latest smart-home products and services,” Best Buy spokesman Jeff Haydock said via email. Blackstone Group LP-backed Vivint didn’t respond to several requests for comment.
Smart homes are a big potential market for Best Buy, and the retailer has recently carved out space in some of its stores for dueling product displays from rivals Amazon and Google, packed with lights, cameras and other digital gadgets that can be controlled by their respective voice-activated assistants. Best Buy has also made smart-home installations a centerpiece of its new in-home adviser program, where a traveling army of 380 salespeople visit select customers to sell them everything from dishwashers to doorbells.
The smart-home management market is expected to expand to $41 billion in 2020, up from $31 billion last year, Best Buy said in an investor presentation last year. In recent quarters, smart-home devices have been among its fastest-growing product categories, and the floor space Best Buy dedicates to smart home grew by 45 percent last year, helping the retailer fend off encroachment from Amazon. After Best Buy posted strong sales last year, analysts’ expectations for the company have risen.
“The market is enormous today and is going to get bigger,” Chief Merchandising Officer Mike Mohan said at a September investor conference. “The amount of merchandise that’s starting to show up in the market is immense.”
The Vivint partnership, unveiled in May 2017, was part of a broader push by Chief Executive Officer Hubert Joly to forge deeper relationships with technology vendors. Still, it had its downsides. Joly told analysts last year that the alliance would have only a “very moderate” impact on the company’s sales and profit in 2017, given that it began toward the middle of the year and involved ramp-up costs. Revenue came from hardware along with installation and monitoring fees.
Vivint’s system lets customers lock doors, control lights or check cameras remotely from an app on their smartphone. It also works with Amazon’s Echo and Google’s Home assistant.
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