Wal-Mart Selling The ‘Wow’ Factor With Consumer Electronics

by Brent Felgner -- TWICE, 6/5/2006

Rogers, Ark. — Wow.

CE is at the core of a handful of merchandise categories Wal-Mart is using as critical positioning statements — including "wow" merchandise — in its effort to pull a better heeled, higher spending customer into its general merchandise aisles.

"One of the things we went back and looked at was this issue about choice, and making sure that we were going to offer the range of price points that customers expected [as well as] the price-value relationship that customers expected at price points above that," explained Doug Degn, merchandising executive VP for hardlines.

And in a sharp improvement in visual merchandising, some 1,300 CE department resets feature a new TV wall, replacing the old in-line gondola or warehouse shelving-type displays.

Wal-Mart's Reinvention Has Ramifications For All Retail Rogers, Ark. — Wal-Mart’s current drive to reinvent itself will likely go a long way toward redefining the way large chunks of retailing are done.

Make no mistake: Wal-Mart’s CE department still looks nothing like a Bjorn’s or a Best Buy. But Wal-Mart’s 130 million customers who shop the store weekly are seeing better goods than they’ve ever seen there before, while the retailer fiercely protects its core, everyday low-price customer.

"It’s not about going upscale," Degn stressed. "We’re going to be committed to that price leadership and that opening price point, but at the same time we believe we can come back and offer choices above and beyond what we’ve done historically."

Those choices include the top-tier brands that are beginning to appear within Wal-Mart’s A/V assortment. While the mix is still predominated by mass merchant monikers like Emerson, Hyundai, Initial, Sanyo, Soyo, Tatung and Wal-Mart’s own ilo private-label line, premium nameplates like Panasonic, Hitachi, Toshiba and Sony Grand Wega are now embarking on Bentonville’s brave new world.

Wal-Mart is also pressing home CE to resonate with young gamers and the iPod crowd. A new low-slung digital display under glass — featuring iPods on one end-cap, a game console on the other, and portable video and MP3 players in between — is an anchor fixture within Wal-Mart’s CE department redesign, itself a fixture of this year’s 1,800-store remodeling effort.

How much sleep should CE dealers lose? Bank of America Securities’ retail analyst David Strasser believes the changes are gaining traction, and projects that Wal-Mart’s 2006 CE sales will increase 10 percent net and 9.1 percent in comps. As always, however, consumer response will be the ultimate judge of the merchandising strategy’s success or failure — and, of course, Wal-Mart’s ability to execute it at store level.