Distributors Voice Mixed Views On Walmart's Plans, Practices

By Steve Smith -- TWICE, 6/7/2010

NEW YORK - Walmart's decision to upgrade and put more emphasis on CE generated a variety of differing comments from distributors.

While discussing the marketplace in TWICE's midyear distributor report (see story on p. 30) executives questioned said Walmart would have no effect on their business, while others said it would help promote CE as a category

Here are what some of these executives has to say in the past couple of weeks:

Mark A. Gustavson, executive director/marketing and communications, WYNIT: The "Clash of the Titans" between Walmart and Best Buy will continue to pressure manufacturers to take cost out of their distribution models. Distributors serving big-box must provide clear value to both manufacturers and major retailers if they wish to stay in the game.  Competing retailers that offer technical expertise, service and personal attention will develop and maintain a solid base of loyal customers.  Successful distributors must continuously work to identify the unique needs of each of their retail customers, and provide specific solutions.

Doug Robison, president, DSI Systems: We despise Walmart and how they go about their business. It is our job as a distributor to assist the independent retailers as they compete with Walmart. It is important to steer our dealers to the product lines that won't be featured in Walmart. We also will continue to train our dealers in step selling and ways to avoid the handful of SKU's Walmart will burn. The independent retailer has an advantage as the business gets more complex.

With IPTV convergence, as well as 3D, the independent has the advantage over the national accounts. Consumers will need explanation and demonstration on the floor, as well as installation and service. The consumers will seek out the local expert as our business gets more complex, and they know that won't get any sort of expertise on the floor of a Walmart.

Dennis Holzer, executive director, PowerHouse Alliance: We don't believe Walmart's renewed emphasis will change our business or strategy. Our customers, predominantly installers, provide solutions to customers. Our customer's customer, while value conscious, does not want to buy and pickup a TV, or select individual components and all the accessories to bring it home and install in on their own.

They want it all offered, delivered, installed and ready to go when they get home. They are willing to pay a slight premium to have this all done for them.

Fred Towns, sales and marketing senior VP, New Age Electronics: Walmart has brought more awareness to the market by carrying a tier-one product line. This allows competing retailers to offer a more holistic solution to best service the consumer.

Jeff Davis, sales senior VP at D&H Distributing: It's always good when a large retailer such as Walmart emphasizes a category. It raises awareness of those technologies for everyone. Our dealers and resellers are accustomed to competing with all forms of big box retailers. That's where value-added services come into play.

Warren Chaiken, president/COO, Almo: Walmart's CE resurgence is challenging.  However, the smaller retailers competed on service, not just price.  Local and regional CE retailers need to focus on consumers interested in quality, service and relationships, differentiating themselves with feature-laden products and very well-trained, helpful sales personnel.

David Kaplan, executive director, Digital Delivery Group: Walmart is a fierce competitor with a loyal customer base. It remains to be seen how their emphasis on CE (and install services) affects our channel. On the whole, while they represent a significant and growing share of CE revenue, I think they sell to a different customer than the clients of our independent custom integrator dealer base.