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Walmart Gets The Picture On Photo Frames

6/07/2010 09:12:00 AM Eastern

NEW YORK - No longer the novelty products they were a few years
ago, digital picture frames have developed into a product that is perfect for
the Walmart shopper.

Many products offer price points that start at less than $100.
They make great gift items for a wide range of ages and technology interests,
and they can be merchandised without comprising a great deal of shelf space.

"Digital frames is a big mass-market category today, so it does
fit in well with what they do," said Stephen Baker, industry analysis VP at The
NPD Group. "It's a more interesting category for Walmart than it might be for a
traditional consumer electronics retailer, where the business is very seasonal,
fashion oriented and not so much of an interest for a tech-savvy
customer." 

Although the field of digital frame suppliers is huge, in recent
in-store merchandising assortments, Walmart has kept the brand selection to a
minimum - Kodak and Philips.

As this went to press, many of Walmart's older and smaller stores
placed photo frames in the imaging section, near the in-store printing station.

The retailer has a dramatically different merchandising approach
for its brick-and-mortar and online environments.

In some Walmart locations, approximately six SKUs are showcased
on peg board merchandising displays near the end of an aisle rack. Most
included basic feature sets at lower price points looking to draw impulse buys.

For example, the digital frame section at a smaller Walmart
location in Danbury, Conn., included screen sizes ranging from 7 inches to 10
inches, with all but one advertised for less than $100.

These start with a $79 Kodak 7-inch 16:9 basic black frame with
512MB of onboard memory, positioned above a $57 Philips 7-inch wood-tone 16:9
model with 128MB of memory.

From there, the line steps up to a $99 Kodak 8-inch 16:9 model
with 128MB of memory and on-frame touch-activated controls.

This is positioned above a second $57 Philips 7-inch 16:9 model
in black with 128MB of memory.

Next to that is a $69 Philips 8-inch 4:3 model with 128MB of
memory and 800 by 600 resolution.

The line concludes with a $129 "Rollback special" Kodak 10-inch
16:9 black frame with touch border control, 800 by 400 resolution, and built-in
Wi-Fi connectivity to easily access files from a connected PC or Wi-Fi camera
phone.

Baker of NPD said that for the category Walmart uses a basic
model selection that they edit down based on the volume and sales potential of
individual stores.   

The mass merchant's online brand and model assortment is a
completely different story.

Walmart carries approximately 45 SKUs online from vendors
including Alurtek, Coby, Envizen Digital, Epson, Frame Wizard, Kodak, Motorola,
Pandigital, Philips, Smartparts, Sony, Sungale, Viewsonic and Westinghouse
Digital.

In some cases, SKUs are carried over from previous model lines,
explaining how several brands remain on the list despite having left the market
or dropped the category over the last 12 months.

"It doesn't cost them anything to carry the brands online because
it's just another model that they have to sell," said Ron Glaz, IDC Research
imaging program director. "They don't carry it in inventory - it comes from the
vendor or another channel that's a warehouse that's actually holding it."

Online screen size assortments range from 3.5 to 15 inches
(diagonally), with pricing starting at $34 for a closeout 8-inch Westinghouse
frame to $334 for an Epson PictureMate Show combination digital frame and photo
printer.

The majority of the SKUs featured 7- or 8-inch frames with basic
feature sets.

The retailer is also using its Web site to experiment with
higher-tech frames. For example, the mass merchant carries online Envizen
Digital widescreen 7- and 10-inch digital TV and photo frame combinations for
$92.88 and $129, respectively.

It also carries a 7-inch Wi-Fi-enabled frame from Kodak for $114.

Still, the more elaborate SKUs have not yet penetrated the
in-store mix.

"It's not uncommon for retailers to use their dot-com platforms
to present a wider product offering with more diverse products, but it's hard
for anyone in e-commerce to come on like gangbusters and compare to any real
brick-and-mortar-type volume," said Jason Topel, Pandigital assistant VP.

He added that to a degree, Walmart will take successful vendors
on its Walmart.com operation into the brick-and-mortar environment when changes
are being made to the departments.

Representatives from Kodak and Philips declined to be interviewed
on the in-store program. But industry sources said Walmart is rethinking the
two-branded merchandising strategy for the category now.

A Walmart executive told TWICE that the store doesn't engage in
any bundled product promotions on frames and cameras, or other related
items. 

"That's not a promotional platform we are pursuing in stores at
this time," the executive said. "We currently have no plans for 3D cameras or
3D digital frames."