An employee brings a television into a customer’s car at a Best Buy store in Orlando, Florida.
Paul Hennessy | SOPA Pictures | LightRocket | Getty Images
Best Buy said on Tuesday it was launching a new annual membership program nationwide and included a perk that could get people to sign up: access to hard-to-find items during the holiday season.
Consumer electronics retailer Totaltech’s program costs $ 199.99 per year. Customers who sign up will receive unlimited technical support 24 hours a day, exclusive member prices on merchandise, up to two years of product protection on most purchases, free delivery and installation and an extended 60-day window for returns and exchanges, among other features.
Best Buy began testing the program in select stores in April.
The retailer is leveraging specific vacation benefits as the pandemic fuels global supply chain challenges. The Covid-19 outbreaks have temporarily closed some factories and ports, causing a shortage of semiconductor chips that go into everything from cars to laptops. Freight costs jumped and ports became congested, resulting in higher prices for customers and less product on the shelves.
Retail analysts predicted an increase in holiday spending, but warned of fewer offers and shipping delays. They encouraged consumers to start shopping early and purchase the items they want when they see them.
Best Buy didn’t specify which high-demand products are available to Totaltech members, but it does sell popular gift items ranging from video game consoles to Apple products. He said in a press release that members will have access to Member Monday, a special exclusive offers event that begins October 18 and continues through the holidays.
The event will also include offers for customers who are part of Best Buy’s free membership program, My Best Buy.
With the launch of Totaltech, Best Buy phase out a membership program of the same name which had fewer advantages.
Piper Sandler’s retail analyst Peter Keith called Totaltech’s upcoming launch a “potential game changer” for the company and its stocks in a research note last week. He said the membership program is “one of the most intriguing initiatives” Best Buy has had in over five years. Plus, he said, it’s because the company’s shares are trading at a cheap valuation.
Best Buy shares closed at $ 105.49 on Monday. Shares are up about 6% this year.
Piper Sandler believes Best Buy is overweight and has a price target of $ 150, about 40% higher than where it is currently trading.
Keith estimated in the research note that Best Buy will add 3 million new members, in addition to the roughly 3 million that are part of the membership program that is winding down. He said he expects the retailer to grow that membership base to between 6 million and 10 million over time.
And he said he anticipates the holiday season will help generate interest as Best Buy advertises the program and customers see member-only price discounts on the retailer’s website and in stores.