MAY 19, 2009 Wal-Mart Steps Up Its Game in Electronics Aisle
By MIGUEL BUSTILLO Wall Street Journal http://online.wsj.com/article/SB124260342750528573.html Wal-Mart Stores Inc. is revamping the electronics departments in its more than 3,500 U.S. stores this week, ramping up an aggressive battle with Best Buy Co. and Amazon.com to seize customers up for grabs due to the demise of Circuit City Stores Inc. Wal-Mart's roomier and more interactive electronics displays begin arriving in stores Monday, showcasing the latest mobile phones and portable computers, and including standalone sections for popular brands such as Nintendo Co. and Apple Inc. "Circuit City's business is up for grabs right now and we expect to get our share," Gary Severson, Wal-Mart's senior vice president of home entertainment, said in an interview at the company's Bentonville, Ark. headquarters. Its push comes as the economic downturn has turned more affluent customers into Wal-Mart shoppers. The world's largest retailer by revenue was expanding its electronics selection before Circuit City collapsed. Over the last five years, it moved away from entry-level televisions and DVD players from lesser-known manufacturers toward more sophisticated products such as Research in Motion Ltd.'s Blackberry smart phones. Wal-Mart executives said their stores will soon carry Palm Inc.'s Pre smart phone, a highly anticipated gadget, contrary to bloggers who claimed it would be a Best Buy retail exclusive. Wal-Mart is adding to its assortment of higher-end televisions by manufacturers Sony Corp. and Samsung Electronics Co., and broadening its array of Blu-ray disc players and movies as it expands a strategy of selling top brands at lower prices than rivals offer. Its moves are fueling fierce price competition. An Acer netbook, or small portable computer, that sells for $328 on Walmart.com is $329.99 on Amazon.com. Bestbuy.com sells a MSI Wind 10-inch netbook for $309.99. The same machine was reduced to $298 from $308 on Walmart.com. To be sure, Best Buy retains a lead in U.S. consumer electronics retailing with 22% of the total market, based on market-research estimates from Stevenson Co. But Wal-Mart has been quickly gaining. Circuit City filed for bankruptcy last November and closed its stores in March. Its closing left about $11.1 billion in annual revenue up for grabs, estimated Deutsche Bank. But Best Buy has seen fewer shoppers walking through its doors during the recession, while Wal-Mart is gaining shoppers. Wal-Mart also is leveraging a more subtle advantage it boasts over standalone electronics chains: a mom-heavy clientele. Retailers say women often have final say over household purchases of new video games and televisions. Best Buy was assumed to be the biggest beneficiary of Circuit City's liquidation. But Morgan Stanley analyst Gregory Melich recently noted first-quarter market-share estimates show Wal-Mart and Amazon splitting much of Circuit City's television business. A Best Buy spokeswoman declined to comment. Best Buy has said it miscalculated demand and ran short of televisions in January and February, which contributed to lower sales. Paul Ryder, an Amazon vice president overseeing its electronics business, said the Seattle, Wash., retailer is increasing the range of products it sells, so that it can offer often a wider selection of electronics than any physical store can carry. Wal-Mart fought for years to be taken seriously by electronics makers that wanted to cultivate a top-of-the-line image. Apple, for instance, didn't sell its music players at Wal-Mart until it released the inexpensive iPod Shuffle, and released the iPhone at Wal-Mart only after it had been selling through Best Buy. "A few years ago, the suppliers wouldn't even consider us for these kinds of technologies -- they'd take it to Best Buy," Kevin O'Connor, Wal-Mart's vice president of consumer electronics, said as he stood beside a new display that showed off Blu-ray players and movies as part of a wall of flat-panel televisions. "But Wal-Mart is where the consumer is going." Wal-Mart in June will start selling Dell Inc.'s new Studio One 19 touch-screen computers. "In this environment, you want to associate yourself with big [retail] brands," said Michael Tatelman, vice president of sales and marketing for Dell's consumer business. "Wal-Mart has been incredibly collaborative." As Wal-Mart senses an opening, it is expanding its mobile-phone assortment and adding an island where shoppers can pick up and try out laptops and netbooks. Wal-Mart previously kept the portable computers under lock and key for fear of shoplifting, a sore point with some manufacturers. -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
