ACHRNEWS

Best Buy Tests Home Energy Market

Contractors Face Competition, Future Business Models

October 31, 2011
Best Buy
Best Buy entered the home energy management market in three of its stores this month — Best Buy Clark Street, Chicago; Best Buy Willowbrook, Houston; and Best Buy San Carlos, San Carlos, Calif. The trial provides customers with access to smart thermostats and solar elements as well as a plethora of controls and efficient lighting solutions.

Rolling out more than just new products, the big-box retailer is also bringing new services to the table. Consumers can access an online free energy assessment; find savings for a specific upgrade; and schedule a home energy audit/survey with the Geek Squad®.

What happened to the HVAC contractor? Contractors are already familiar with big-box product competition, but being replaced in the home could arguably be a situation more contractors will face in the future. Should contractors be concerned?

Online Services

To answer that question, it is important to know what is being offered. The online energy assessment takes approximately five minutes to complete and asks questions about a home’s appliances and overall envelope. Taking into consideration things like the age of the equipment, insulation, windows, etc., once the survey is complete the computer produces a report that outlines what products could be replaced and estimates the payback. From there, consumers may choose which products to replace and order them online or head to the store with their energy-saving product suggestions in hand.

Although the online audit system considers the heating and cooling systems, the survey and its post-questionnaire suggestions don’t discuss equipment replacement possibilities for either system. It does offer accessories, but when it comes to the core system, the largest piece of heating and cooling equipment the company sells are room a/c units. Best Buy does, however, provide a page of energy information about a home’s heating and cooling energy expenditure and what could be considered to alleviate the amount of energy being used (http://bit.ly/mVemNG).

The button on the a/c system states, “Air conditioning is generally viewed as a necessary evil for the sake of maintaining a comfortable home air temperature in warm months. Although air conditioning consumes a substantial amount of energy (especially when compared to a ceiling fan), there are energy efficient models on the market that reduce bills and some that even are eligible for federal tax credit.” Clicking the “Learn More” button takes the user to a more detailed page with an explanation of different types of systems, and tips for optimizing system efficiency. The company did, however, place a DIY meter at the top of the page and suggest that an expert be contacted to complete some of the tasks on the page.

In-Home Services

The online services being offered seem more directly focused on saving energy and alleviating the electricity grid. The in-home energy audit offered by the Geek Squad, however, steps a little further into the HVAC contractor’s territory. Best Buy describes its Geek Squad Home Energy Survey as follows: “A Geek Squad Agent will inspect your home, explain alternative renewable energy options, and prepare an overall summary of your home energy consumption along with energy savings tips and facts to help you lower your energy costs; explain the latest home energy saving technology including home management devices, home monitoring products, and smart thermostats; examine your appliances to ensure they are running optimally; and explain how to save energy by adjusting your TV and computer to power-save mode.”

That last one doesn’t fall into HVAC, but the rest do. There is also a video on that page that introduces consumers to a blower door and an infrared camera being used to potentially reveal leaks in the home (http://bit.ly/q9G5RB).

According to the video, any of the energy-saving suggestions made by the Geek Squad agent can likely be purchased and installed on the spot. Charlie Oddo, HVAC manager for the Palm Beach County Housing Authority in West Palm Beach, Fla., doesn’t like the idea of Best Buy selling and installing things like smart thermostats.

“Are they going to carry transformers in case they short them out while replacing homeowners’ thermostats?” he asked. “What if when they replace them they don’t configure it correctly for gas/electric heat? Do they know anything about air conditioning at all? I feel this is a bad idea that they should probably leave to the professionals.”

Is This the Future?

It’s no secret that HVAC industry members often bristle at the idea of big-box retail being involved in the trade. Some industry members, however, see things differently, and the idea of picking up a smart thermostat at Best Buy isn’t one that leaves them chafing. Take Alexis Terzado, international HVAC regional sales manager at Innovair Corp., Miami, Fla., for example. He sells equipment and products in the Caribbean and some South American nations; and while visiting his customers he sees many different models of distribution.

“Some countries are mostly served by distributors and some are a free for all or a Wild West where
units are available even in the supermarkets. You can buy a gallon of milk and an air conditioner,” he explained. “Eventually the U.S. contractor will not be able to make their equipment markup, just the labor. People will call them for bids on installing the units they purchased.”

What has Adam Gloss concerned is whether those advising in the home have the ability to offer the proper solutions, install them, and then maintain them over the life of the unit.

“Unlike a television, stereo, or any other plug-in appliance, HVAC products are part of a system in the home, and it takes a great deal of expertise, education, and experience to make them work properly,” said Gloss, vice president of Bel Red Energy Solutions in Seattle. “This is something that many HVAC contractors have and that all of the big-box retailers lack.”

Find a list of manufacturers and the products being offered in Best Buy’s home-energy management line. http://bit.ly/nbzkdT

Sidebar: Compete With Big-Boxes

According to Adam Gloss, vice president of Bel Red Energy Solutions in Seattle, Wash., “You can’t win a price war with Best Buy, but you can beat them on value and service; especially with something as complex as HVAC. If we can do these things, it won’t matter if Best Buy, or any other big-box retailer comes into the market, they won’t have the ability to win against us.”

Gloss suggested the following keys to competing against big box retailers.

• Get into the market first and establish a strong position.

• Build on the relationships and trust with homeowners. This is something that no big-box store can duplicate, and that we have in abundance.

• Do things right. Make sure you have the training, expertise, and certifications to really deliver on the promise of these products. There is nothing more valuable than your reputation. Don’t sully yours.

• Don’t commoditize the product. Recognize the value of what you provide, make sure your customers understand that value position, and charge for it.

Publication date: 10/31/2011