Yes, the big tech news this week was Apple’s announcement that Steve Jobs officially stepped down as CEO, but given Jobs’ persistently poor health, we all knew that, sooner or later, he would have no choice but to resign. Rather than adding to the Jobs-resignation echo chamber, let’s focus instead on some news that’s likely more immediately relevant to small business owners; Best Buy’s pilot program with Rent-A-Center.
Essentially, Best Buy will begin incorporating Rent-A-Center kiosks into its brick-and-mortar stores; if customers are unable to get credit approval for that new flat-screen television—or, perhaps, if they just want to outfit a temporary domicile with some high-tech accessories—they’ll be able to purchase the device, sans credit check or down payment, from the RAC kiosk. Though Best Buy and Rent-A-Center have been fairly tight-lipped on the specifics of the deal, it’s believed that RAC will actually purchase the products from Best Buy, and then sell them to the consumer (who, if they keep the product until it’s paid off in full, will end up paying RAC two-to-six times more than Best Buy’s retail price).
The economics behind this alliance are pretty straight-forward; the economy continues to be in shambles, consumer spending has dropped, and, not surprisingly, Best Buy’s income dropped 12 percent in Q1 2011. While it’s unlikely that Best Buy will be skimming from any of the wild margins RAC enjoys on its sales of Best Buy’s goods, the arrangement will—if fully expanded nationwide—enhance Best Buy’s overall sales figures, a welcome boost amidst years of declining DVD sales and recent downturns in the television market. With many US banks reducing consumers’ credit lines, Best Buy’s decision is likely a savvy one, especially since Best Buy will not have to assume any of the logistical or legal liabilities that are part and parcel of the rent-to-own industry.
For cash-strapped general consumers, this announcement is a double-edged sword; while it’ll allow them to take home that once-unattainable home theater system, it also means that (should they fully purchase it via the rent-to-own option) they’ll be paying substantially more for it in the long-term, which could further erode their finances and credit scores.
But, for small businesses, the Best Buy/Rent-A-Center alliance you actually save you quite a bit of money. How often have you purchased expensive electronics devices for a single event, or short-term use? Extra LCD projectors for a big client presentation, camcorders to record a PR event, a new desktop for a temporary seasonal employee; sure, there are commercial B2B services that lease such products for short-term use, but such companies usually have a fairly poor product selection, with annoying lease terms, and excessive costs. The Best Buy/Rent-A-Center option, if used judiciously, could be the perfect solution to your small business’s short-term tech needs.