Best Buy’s bet on Meta Ray Bans and shop-in-shops

0:09Melissa Daniels:Hello and welcome to the Modern Retail Podcast. It's our show that covers the ways the retail industry is changing and modernizing. I'm Special Projects Editor Melissa Daniels. Today we have a really exciting conversation to share with you. I'm excited about it because I am still a junkie for a great in-person retail experience. And I'm all about the ways that stores are figuring out how to use their footprint in new and exciting ways and give us something that we can't get from just adding to cart from our mobile device. So here with me to talk about this, we have Patrick McInnes. He's the EVP chief revenue officer with Best Buy.

0:49Melissa Daniels:And they're doing a lot over there to rethink how to make in-store shopping more relevant to consumers. And the avenue for this conversation we're going to have is talking about everything they're doing with Meta Ray-Bans. They've had these products in stores since last October ahead of the holiday season. This year, they're deploying 900-square-foot shop-and-shops dedicated to the products in select stores. They're training up staff on how the products work, how to sell them. But more broadly, introducing these products and the Shop and Shop is also giving Best Buy a way to rethink how they use their footprint.

1:23Melissa Daniels:So, Patrick, welcome to the show. Thanks for having me, Melissa. Excited to be here. I'm really excited to get into it. So just for some quick background on the product itself, for those of us who may be on the more Luddite side of things, what are the Meta Ray-Bans? What is the new product that you're selling? So there's actually a couple of variants of MetaRaeBand. So there's what we call AI glasses, which don't have displays. So it's basically eyeglasses with cameras and headphones and obviously computing processing power built inside of them. and those are what you are able to use to take pictures and able to listen to music without having earphones in and use meta AI to actually help you in your everyday life with whatever you're trying to do.

2:14And then there's actually meta Ray-Ban display glasses which have displays built into the lenses of the glasses and those take the experience to a whole nother level where you're able to actually see things like texts on your glasses or directions as you're walking through a city, for example. So two different variants of MetaRay bands that we're talking about here today.

2:37Melissa Daniels:Very cool. So how did these products wind up in Best Buy stores? What was your relationship like with Meta to develop this partnership? So it actually requires us to go back in time a little bit, about 10 years. We started working with Meta, actually initially on virtual reality. The first product was called Oculus. And that was the start of our relationship. And, you know, we learned a lot from each other through going through that product lifecycle and different iterations of that product. Most notably, how important merchandising is to the experience and how important expert, skilled blue shirts to really bring that product to life for customers.

3:20And obviously, fast forward from there, we started working with Meta very early when they were developing the first generation of Meta Ray-Ban glasses. And that led to several generations of Meta Ray-Ban since then. And obviously, the most recent big new introduction was Meta Ray-Ban displays last fall.

3:42Melissa Daniels:So as far as the floor space changes that you're making here, talk to us about what customers see when they're walking into a Best Buy that has one of the new shop and shops. We're doing a significant amount of work on our stores this year and into next year. We call our reflow. And the biggest change that we're making is we're moving one of our largest departments or categories into the center of the store versus on the perimeter of a store. And that category is computing. What that allows us to do is to free up some of the small bits of space in the center of our store, along with that freed up space that computing had on the perimeter and create a big block of space on one side of the store that allows us to do some very interesting new things with our partners.

4:31And this is where you see Meta showing up in. It'll be 50 stores by the end of this year. And what you're going to see is at the very front of the store, a 30 foot by 30 foot experiential meta shot. And the first thing that you'll think of when you see it is, wow, it looks like an optical store because it has walls of glasses to try on. It has experiential displays. It has smart mirrors that allow customers to envision what different styles and colors of glasses will look like on their faces. So it's really dynamic and draws you in. It's a very experiential space.

5:12Melissa Daniels:I love that. I love that. And when you mentioned doing a reflow, what are some of the things that yourself and the merchandising team has to consider as a part of that? You know, what are some of the things that you walk through? What do you consider when saying, OK, we're going to move this here, we're going to move this there? The big driver for this really was we wanted to do things like this, like a metal labs at Best Buy or insert other partner that may have a need to do something that is very experiential. The problem is where do you put it? And if you think about how stores come together over time, it's not really easy to go into a store and find an open 30 by 30 foot space or even a 10 foot by 10 foot space to do something.

5:59So really, the intention behind this was to make the ability to do something like this easy and be able to do it fast. And by freeing up all that space all at once really gives us the ability to move really swiftly on something like this. So while Meta is the front of that old computing department in 50 stores, we have space behind Meta that is flexible. And we can bring different partners in to do different experiences and activations in our stores. So that's really the driver behind it. So rather than doing this store by store, piece by piece, it was a very intentional move to, you know, free up a bunch of space all at once with the plan to do exactly this type of work for our customers with our partners.

6:46Right.

6:47Melissa Daniels:That makes a lot of sense. How much can you share about the space that you're planning to use for these kinds of experiences in one year, in five years, in 10 years? I'm just sort of curious if you can share anything more about the long-term vision, especially because I know your incoming CEO has spoken about, you know, really elevating that in-store customer experience and making it really future focused. Absolutely. One of the top priorities is elevating the Best Buy experience for our customers. And this is a very visible key way in which we're doing that. So in terms of the future look, we are planning on doing a lot more stores next year, over 100 stores.

7:28We'll have this reflow treatment. And obviously, we'll work with our partners, Meta included, to determine where we put experiences like this across those locations that get the reflow treatment. Yeah.

7:41Melissa Daniels:Do you envision more AI type of products coming into the store, too? You know, is that something that you feel like these spaces will be used for? I think where we're at right now is really exciting. We have visibility to a lot of innovation coming from our current partners, as well as a lot of new emerging partners. And this is exactly the kind of space where you want to bring something to life and make sure that you're pairing it with expert blue shirts who are steeped and immersed in a particular brand, as is the case with Meta. So there's really a strong pipeline. If you go back to the COVID era, there was really a bit of a pause in research and development from the entire industry because everyone was focused on a fulfilling product, basically fulfilling what they had in their product assortments that they currently were sitting on.

8:36And now, finally, we're seeing really strong innovation coming from, like I said, existing partners as well as emerging partners. So, yes, the question around AI, I absolutely think there's going to be stories that we're able to bring to life in this space with both small partners and some of our largest partners that we work with who are working on AI integration into their products. And certainly I envision a cross-category AI story that we can bring to life with some of our partners. And that certainly is some work that we're already planning and working on with several of them.

9:15Melissa Daniels:Totally. I look forward to the AI-infused appliance section. I feel like that's coming down the pike. It's already happening. Absolutely. AI is finding its way into everything. But I think the important thing on that note is how we help really bring to life the use cases that are enabled by AI and not really focus on AI itself. AI is something that powers. It's an ingredient that really enables new use cases. So while you could say AI is behind the ability to translate something with MetaRayBan glasses, really what the customer is looking for is the ability to travel easier and smarter. And AI is just something that enables that.

10:07Melissa Daniels:I'm glad that you mentioned, you know, the sort of selling experience and the expert blue shirts, because to me, that's sort of what is the key, you know, link between doing something innovative in your store and then making sure it actually delivers on customer needs. So, you know, how are Meta and Best Buy training staff to really nail that experience? It's a great question. And it is absolutely the secret ingredient in this whole experience. Our expert blue shirts that are 100 % focused on Meta. We've collaboratively developed the training plan for 300 employees. And we collaboratively delivered that training actually just last week to 300 employees in person in Minneapolis.

11:01So an investment of a full week, bringing to life the Meta brand, bringing to life Meta Ray-Ban display glasses, Meta Ray-Ban glasses, our MetaQuest 3 and 3S products that live within that space, and really focusing on, like I said, the use cases that you can bring to life for customers. And that goes all the way through to the fulfillment. So things like prescription fulfillment for customers who have that need is part of that training as well. But this is a group of people who are energized and motivated around the meta brand and what they're doing in that space, fully dedicated to the meta brand.

11:44Yeah.

11:44Melissa Daniels:I feel like there's lessons learned there from anyone who staffs with associates. You know, did you sort of ask people to raise their hand and volunteer who wants to become a meta associate? Do you hire out for that to find people who are already interested? You know, what's the workforce allocation look like when you're starting a project like this? There's a bit of both. So certainly some of the meta dedicated employees that we just talked about training came from an existing role at a Best Buy. But there's a big component of these employees who are recruited and brought from the outside to join this type of expert workforce.

12:25So it's a bit of both. And I think that's great, too, because you're able to infuse through the employees who came from Best Buy a little bit of Best Buy culture, Best Buy values into the workforce. And, you know, that comes through in the training. And obviously the fact that we do it in person gives people an opportunity to kind of collaborate and share their experiences with each other and really kind of build that strong team culture that exists now within the meta Blue Shirt workforce.

12:55Melissa Daniels:Absolutely, that makes a lot of sense. What are some of the most common questions that the team is getting? You've been live for roughly six-ish weeks now, I think with some of these displays, any sort of through lines and the questions they're getting or the conversations that they have with customers? I think the first insight is, wow, customers are coming into this space because you simply can't avoid not going into it when you see it. It really does draw you in. So that's the first big insight is just sort of a kind of an emotional response from customers as they see the space. I think that the next one that we're certainly hearing from our employees is what can it do for me?

13:41How can it make my life more productive? How can I make my life simpler? How can it power some of the things that I am passionate about? And really what you recognize is every customer is coming at this from a different place. You may have an athlete that's using or wants to use something to better enable their training plan. Like, find me a meta, find me a running trail near me. Right. This is something that the product can do for for an athlete or someone who's passionate about cooking that wants some assistance as they're making a recipe at home. Right. They can ask Meta to explain how to cut something properly or how to trim something if it's something that they're putting into a meal.

14:24So everyone is different. And you have to make sure that the questions that you're asking are getting that customer's passion points out so you can match the capabilities of the product to what their needs are.

14:38Melissa Daniels:Yeah. Is there like an aha moment there, you know, where folks try it on and then they say, you know, okay, ask it a question. And then it starts to unlock. Like, I bet you've seen that happen now. I think everyone has their own kind of interesting aha moment. I mean, I'll give you a great example that I think really helped bring to life the Meta Ray-Ban display. This was at our holiday training event last fall. We always pull together all of our general managers across all of our stores and we do a holiday prep session in a location. And our CEO, Corey Berry, was addressing the audience and she had Meta Ray-Ban display glasses on.

15:24And in those Meta Ray-Ban display glasses, she had captioning of her script, basically. So she was able to use the glasses to help guide her discussion with the audience versus using typical teleprompters. And she told the audience that. So I think that was a bit of a, wow, I didn't know that was possible, a moment that hit a thousand people all at once. For other people, it's different. For me, it was a really simple thing. It was the ability to take a picture without having to pull your phone out on a bike when I was with my family on a bike tour. And that's just one of those things that took the technology out of the equation and just made something that you wanted to do really easy.

16:05Melissa Daniels:Wow. Yeah, the transcription example is really interesting. I feel like there's a huge content creator on lock there. If you really wanted to kind of market within marketing, there's a huge content creator on lock there. And yeah, I just imagine that folks come in with different questions, too, about the technology. You know, has the staff sort of been prepped in handling people's maybe like insecurities or controversies around AI use? Because, you know, there's folks out there who are like, hey, I'm worried about security. Hey, I'm worried about like surveillance. You know, do you talk to your staff about those conversations that might come up?

16:43It is absolutely a part of our training that we did. Privacy is a top of mind topic for our customers. It's very important to us. And like I said, our role is to help demystify the technology and really help customers understand what it can and can't do. Make sure that, again, we're going back to what they're trying to do in their lives and really push AI into the background and really focus more on what it is that they're enabled to do with the power of the technology. Again, acknowledging the fact that there are, you know, there's realities. The metal ray band glasses and metal ray band displays have cameras.

17:27That's something that is real. And you have to make sure you acknowledge that as part of the process of educating customers on what they can do with the product.

17:37Melissa Daniels:Yeah, yeah. Because it's also new still, right? I mean, from your perspective, you've been working on this for so many quarters, it probably doesn't feel new.

17:48It's still very exciting. When you walk into one of these experiences, it's sort of a pinch me moment every time because it truly is the new bar for what an experiential retail experience looks like in our technology space. So it's really cool. Yeah.

18:07Melissa Daniels:I want to stick with any lessons learned there because whether you have, you know, a big box store, an anchor store, or whether you have just a 600, 700, 900 square foot jewel box in, you know, a downtown somewhere, everyone wants experiential retail. You know, what are some of your lessons learned about nailing that? I think you have to challenge some of your assumptions when you're going through the process of building something that really needs to do something very different. And I'll give you an example. In the Metalabs at Best Buy, the product is not tied down with security. So on the walls, you have a lot of different frame styles and colors that we've enabled customers to try on without a tether.

18:57And that's something that typically in a retail environment, you wouldn't necessarily do, particularly with technology products. So that's an assumption that we had to challenge as part of the design of this and really focus on what the customer experience needs to be and make that as enjoyable and effective as possible. So I think it's things like that to make sure that you're not necessarily designing and building for process sake. You're designing and building for the customer. And that may require you to challenge some of your old assumptions and kind of rules around how to do it.

19:38Melissa Daniels:I think that's a really important point, especially from the standpoint of Best Buy, where you've been for decades now handling expensive, cutting-edge technology. I imagine that was a bit of a learning curve for you all to say, okay, we got to untether. It absolutely was. And it's one of those things that you need to get aligned with all the right kind of leaders inside of the company to do it. And also acknowledge that we may learn some things. If we do find that there's a challenge there, there may need to be a modification to the approach we're taking. But what's important is to start with the right experience out of the gate and learn from it and acknowledge that you may need to iterate from there.

20:24Melissa Daniels:Yeah, and it just seems like having the ability for customers to pick up and touch and feel something that they have never experienced before needs to be inviting. You know, I mean, if this is something I've never encountered and I don't know what it's going to look like when I have, you know, transcriptions on my eyeglasses. I really want to be able to know what that's like before I buy it. And I imagine that's where, you know, you're allowing folks to really interact with the product. We've actually done a little bit of a study on our customers in terms of AI glasses and kind of how they're coming at the category.

21:03And over 50 % of our customers say that they want to experience the product from a fit and functionality perspective before they make a decision to buy. So that's why these locations, these experience and activation hubs that we're building are so important. They really are critical to helping customers get inspired and get educated on the product and make sure it's right for them. Yeah.

21:32Melissa Daniels:I'm curious if there's anything else you can share about the associate customer interaction and any best practices or lessons learned that's come out of training there. Because, you know, I mean, even my own experience as a shopper, I feel like I experienced the gamut of you go into a store and there's no one to help you and you actually need help. Or you go into a store and just browse and there's 17 associates trying to put a basket in your hand, you know, and there's a whole gamut there. So how are you sort of looking at the associate customer relationship? Is this a one-on-one as soon as they enter experience?

22:05Melissa Daniels:Is there help desk? How do you make sure that the customer feels like they're being heard and taken care of, but not overwhelmed? So in these locations, the Meta Labs at Best Buy, we have dedicated employees, blue shirts who are in those locations and are available for customers to engage with and to help with demos. There's certain products that require really a hands-on demo. So the MetaRabian display is one that requires a blue shirt involved demonstration because the product has a neural band that goes around your wrist that helps you interact with the display that you see in the glasses. And there's also a fit component of the glasses themselves that require an employee demonstration.

22:59We also are enabling self-directed demonstrations in this space as well and recognizing that some customers outside of the metal Ray-Band display example want to kind of discover on their own. So there's the option of doing both. You can go in and kind of learn on your own and there's pads and tablets that allow you to get demonstrations of the different functionality of the glasses. Or if you want, you can you can ask for the support of an expert blue shirt to to guide you through it. So really, it's recognizing that certain customers may want to be a bit more self-directed and certain customers may want more of a handheld experience.

23:36Melissa Daniels:Yeah, I feel like that's especially crucial with technology because it is such a personal thing that I sort of just want to know what it is and how I can deal with it and get to know it a little bit, you know, I'm curious if there's any in your years of merchandising experience, you know, just any of your other biggest lessons learned or takeaways from shepherding this project through that we haven't touched on yet. You know, I imagine there were some new challenges, new tensions, new things and processes to implement, but also just any other moments that stood out to you of like, wow, this was, we really outdid ourselves here.