Why Best Buy Is Rooting for the Smart Grid

Joel makower Joel Makower takes a look at Best Buy's efforts to establish and market itself as the leader in green products and services to a burgeoning mainstream consumer base.  Many of the opportunities to increase energy efficiency can be found in the appliances and products available in the store and Best Buy is aiming to capitalize on the growing market.



Posted June 29, 2009

By Joel Makower Two Steps Forward

The retail giant that helped bring car stereos, camcorders, and CD players to the masses wants to be homeowners' best friend in the emerging world of smarter, greener technology.

Best Buy hasn't been front and center as a green business leader. Thecorporate responsibility section of its website focuses primarily on Energy Star appliances and e-waste recycling, which the company rolled out to all of its 1,000 or so U.S. stores earlier this year. Beyond that, the company seems to be engaged in the usual efforts to reduce its environmental footprint.

Behind the scenes, however, Best Buy has aspirations to become consumers' go-to resource for a range of green products and services, from e-vehicles to solar panels to a myriad of gizmos designed to help households plug into the smart energy grid as it rolls out in the coming years. The company's thinking, along with its initial efforts, suggests that the mainstreaming of next-gen green products is within view.

At first blush, a company better known for stereos than solar panels may seem an odd match to be ground zero for green tech. But there's a logical link. As the wired and wireless connections grow among home energy systems, electric vehicles, and information technology, consumers will need a reliable resource for finding products and expertise, as well as the ability to make everything work together as advertised. That's where Best Buy hopes to come in.

If you scan the landscape of what's coming over the next few years, you begin to see the opportunities: plug-in electric cars that not only can recharge from a household outlet, but which can serve as an energy storage device to power your home as needed; plug-and-play home solar or wind energy devices that can be installed by homeowners; smart home appliances like refrigerators and dishwashers that can negotiate with the local utility to take advantage of the lowest-possible energy rates, or power down to reduce grid stress; home energy meters and related gadgets that allow you to program lighting, heating, cooling, and appliances so as to maximize comfort and minimize energy bills; the ability to control all this remotely via any computer or smart phone; and more.

"When you turn to the smart grid, the ability to take complex technologies that are going to plug into the home, utilize home area networks, communicate back over broadband to utilities — it's going to be a fairly complex system," Rick Rommel, Best Buy's Senior Vice President, Emerging Business, explained to me recently. "We think that's a place where Best Buy can take our experience in in-home systems sales, support, and installation and apply it to the smart grid."

The fruits of these aspirations are just now finding their way into Best Buy stores. In the past few weeks, the company introduced electric bicycles at 20 stores in Portland, Ore., Los Angeles, and the San Francisco Bay area (as well as online). It also plans to offer a cool electric motorcycle, the Enertia, made by Oregon-based Brammo, in which the retailer's venture capital arm, Best Buy Capital, made an investment last fall. "An electric scooter is really just a battery and a computer on wheels," Rommel points out.

If they get traction from customers, e-bikes and motorcycles could become an entry point for Best Buy as a purveyor of other electric vehicles — both sales and rentals. "The change that's in front of us right now is the transition from gasoline to electric," says Rommel. "And if you look at the disruption that this transition in technology does to sales channels, it opens up opportunities for companies like Best Buy to begin to participate." The company hasn't made any announcements — and Rommel wouldn't say — but what follows could be small neighborhood electric vehicles like thePeapod or the Zenn. And maybe even e-vehicle rentals: "We've heard that the Zipcar community is increasingly asking
for secondary cars like trucks and vans that you need just once in a while," says Rommel. "So why invest in a really expensive second vehicle when you can get it only when you need it?"

And then there's the service piece — the critical need to help consumers install and maintain all these gizmos. That's where the Geek Squad comes in. Rommel sees the Best Buy unit — the company bought the Minneapolis startup that specialized in repairing and installing PCs in 2002 — as a natural component of its greentech strategy. "We've been the smart friend that helps the consumer do it themselves, or when they need help in the home we'll do it for them. And that has allowed them to make more sense and get more value from the complex products you put in the home. From a consumer's point of view, if one device that connects to my home area network that does home energy management doesn't work, who do you think they're going to call? Geeks make high-tech house calls, and that is a tremendously valuable asset in a home environment that's becoming increasingly complex."

The story can potentially spin out from there. If Best Buy can garner a following of greentech-minded consumers, the company could play a pivotal role in working with utilities, product manufacturers, and others to design consumer-friendly products — just, as I imagine, it already does for everything from cell phones to flat-screen TVs — along with the technologies that integrate them, leveraging the smart-home communications standards that are beginning to emerge. There's potential for the company to help accelerate markets.

It's a compelling story line, to be sure, but equally important is that it illustrates the potential for incumbent companies to be key players in advancing green technology. While cutting-edge innovation will likely come from countless start-ups, it will be up to the mass merchandisers to accelerate market uptake beyond the green devotees and early adopters.

In the case of Best Buy, it appears to be an early adopter itself, potentially gaining a competitive edge as the green economy truly fulfills its promise.

Joel is co-founder and executive editor of Greener World Media, Inc., which produces GreenBiz.com and its sister sites, ClimateBiz.comGreenerBuildings.comGreenerDesign.com, and GreenerComputing.com. Joel is also the principal author of the annual State of Green Business report and the Greener by Design conference, both produced by Greener World Media.

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