Best Buy is moving in two seemingly opposite directions with in-store product demonstrations. In June, it announced that Meta Labs will open in more than 50 Best Buy stores. The 900-square-foot spaces let customers try Meta’s AI glasses and VR headsets, use interactive displays and smart mirrors, receive personalized fittings, and talk with dedicated Meta specialists. Yet just weeks later, Best Buy reportedly began removing many of its traditional car-audio demonstration displays, some of which had missing products or simply did not work. Demonstrations aren’t disappearing altogether: car-audio manufacturers including Sony, Pioneer, Kenwood, JVC, and Kicker have been paying for their own branded displays, now found in about 300 Best Buy stores.
The contrast highlights retailer actions boosting manufacturer demand. Helping a customer experience a pair of smart glasses may increase demand for Meta’s product, but Best Buy bears much of the cost of providing the service. Worse, customers can learn about a product at Best Buy and then buy it elsewhere—the classic retail-services free-rider problem. Meta’s solution is to become more deeply involved in the retail experience, helping provide dedicated specialists and an elaborate branded demonstration space. Car-audio manufacturers are responding more modestly by financing their own displays as Best Buy retreats from providing them. In both cases, manufacturers that benefit from demonstrations are taking on more of their cost, better aligning the incentives of manufacturers and retailers to provide services that help sell the product.
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