With its sales lagging, Best Buy Co. Inc. is trying to lure consumers who may be putting off buying a new iPad, 3D television or other high-tech gadget for fear they'll soon become outdated.
The Richfield, Minn.-based retailer on Monday announced a new buyback program it said would act as a protection plan to give consumers a hedge against obsolescence.
The program is offered only for laptops, netbooks, tablet computers, post-paid mobile phones and televisions.
It works sort of like a warranty plan. To enroll, consumers pay an upfront fee, which ranges from $40 for some smart phones to $350 for a high-end television. Customers who decide to return the items are guaranteed a refund (in the form of a Best Buy gift card) on a portion of their purchase price, depending on when they bring it back.
There are five levels of gift card refunds, ranging from up to half the purchase price for items returned within six months to a 10 percent refund for a television brought back two to four years after purchase.
"A large segment of early adopters who want the latest and greatest, if they're thinking the next upgrade is six, 12 or 18 months down the road, they might be waiting," said George Sherman, Best Buy's senior vice president of services. "We heard loud and clear that this is something that would make them go ahead and make that purchase with confidence."
Customer surveys showed 73 percent would consider purchasing items such as a laptop, mobile phone, tablet or netbook if a retailer offered a repurchase program, Sherman said.
While Best Buy recently turned in disappointing third-quarter results and said that sales declined during the crucial holiday month of December, sales of smart phones, e-readers and tablets have been healthy.
"This is a way of grabbing somebody and getting your hooks into them," said Akshay Rao, director of the Institute for Research in Marketing at the University of Minnesota Carlson School of Management. "Anything they want to replace, they've got to go back to Best Buy. That is clever."
While some independent retailers offer similar programs to customers, Best Buy said it is the first national retailer to roll out such a plan.
The buyback program offers Best Buy the benefit of collecting an upfront fee that a consumer may or may not collect on. And as sales of warranties drop, it could be a new profit center if enough customers think the hedge is worth it.
Best Buy said it would refurbish or recycle products collected through the program.