Best Buy Poised for 'Strong Market Share' in Connected Home, Says Janney

Best Buy is poised for “strong market share” in the connected home space, said Janney Capital Markets in a report on retail store observations done during the Halloween to Christmas season transition. Among retail chains with electronics products, Janney said Best Buy’s recent expansion into the connected home market in 400 stores initially focuses on home security. Wireless cameras dominate shelf space in stores, Janney said, with Next thermostats, smoke detectors and automated door locks “less visible.” The connected home market will drive traffic in Best Buy stores in the near future “as it improves and becomes more consumer friendly,” said Janney. Lowe’s and Home Depot have laid claim to the connected home customer, but Best Buy will take share through its service capabilities, Janney said. In TVs, 4K Ultra HD and other large-screen TVs have started to show momentum that’s likely to continue through 2015, Janney said. At Target, meanwhile, Janney cited a “half-hearted” approach to consumer electronics, and questioned the retailer’s commitment to the CE category long term. It said Target didn’t have the iPhone 6 Plus on display, the TV category was “lacking the newest technologies” and overall Target stores seemed to “lag other players in newness.” While Janney didn’t see the strategy as wrong, it did say it was different “and could lead to lost relevance in the space.” Lack of branding power, relatively low margins and general “difficulties in merchandising this space” could be holding Target back from a “more substantive offering” in tech, Janney said. Target “may be making the right move, and perhaps it's best to leave the newest technologies to stores like [Best Buy], which has delivery, installation abilities, and infrastructure,” it said.