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Walmart’s Severson Talks CE At CEO Summit

6/22/2009 01:32:00 PM Eastern

Dana Point, Calif. — Gary Severson, senior VP/general merchandise manager of Walmart, gave a glimpse or two of the chain’s strategies and views when it comes to the CE business, in a rare interview.

Severson sat down with Consumer Electronics Association (CEA) president/CEO Gary Shapiro for a one-on-one discussion last Friday during the organization’s CEO Summit, held here at the St. Regis Monarch Beach resort.

The Walmart executive, who is not only responsible for CE but also toys and entertainment software, advised

Wal-mart


Gary Severson of Walmart at the CEA CEO Summit.

suppliers in the audience that if they want to get noticed by the chain, they should “have a great idea and a great product.”

Severson noted that going to International CES is a “great opportunity” for Walmart to “solidify relationships” but is also a “challenge to our buyers to see something new, interesting and different.”

As for what potential suppliers shouldn’t do: “It’s the basics. Never lie or cheat us. You shouldn’t make a promise and not be able to keep it. Nothing disappoints us more than have an empty shelf and have to explain that to a customer.”

Severson said that Walmart does work with smaller suppliers and sometimes introduces them to outside resources, but, “We are really in the business of taking care of our customers.”

He suggested that the industry should “focus on simplicity [and] get away from bells and whistles. The majority of customers not tech-heads. They just want a good experience and good things to happen. Categories that are introduced which are too complicated,” he noted, “won’t come into market.”

When asked if Walmart was concerned about price points of CE products, Severson noted, “Commoditization does not mean sameness to me. It isn’t a four-letter word. For the customer it means ‘I can afford it and understand it.’ This industry thrives on innovation ... and the faster consumers understand technology the faster it reaches more people.”

During a Q&A period with the audience, Severson was asked how Walmart might change to try to help educate consumers about new technology. He said that consumers today are “more empowered” by Walmart’s Web sites, as well as sites run by manufacturers, competing retailers and others. “There is so much information online [consumers can] make an informed decision.”

As for changes at the CE departments of Walmart, Severson said, “Our model is not to become a high-cost A/V specialist. Everyone has their place and the mass customer is more educated than ever before.”

Still, Walmart has “done a lot of things in the past few years” to change its CE in store presentation and product assortment. “Our merchandisers have worked with store [employees] to educate them about products and strategy.”

And when it comes to new technology in the near future that will drive business, Severson said “the digital shift in media,” flat-panel TVs that feature IPTV, 3-D TVs and mobile video should all be standouts.

In mobile video the attraction for the consumer should be “short videos, short bites.” But he questioned, “Will a full-length movie on a cellphone be a great experience? I don’t know.” Consumers may want to “interact with all three [TV, mobile, PC] screens and watch video the way they want to” when they want to.

In discussing the shift from analog to digital in consumer electronics, he reflected, “Ten years ago we didn’t think iPod would be the way to go. But devices have been [developed] to move media around one way ... or 10 ways. We want to be in front of change like Sam Walton said years ago. We want to be what the customer wants, and be with them as things change ... and evolve.”

Looking back, Severson was pleased with the relatively smooth DTV conversion. “The industry, in conjunction with CEA, retailers, government and broadcasters, did a great job.”

He said the biggest surprise for him was that “converter-box sales would be a big blowout item. We were really wrong and underestimated what the government and the broadcasters would do on awareness to see how much it would happen. It was a big surprise and a phenomenally successful item.”

In discussing the demise of Circuit City and its effect on the industry and Walmart’s business, Severson diplomatically said, “We respect all of our competitors. Circuit City lost its direction and how it talked with its customers. We looked at the opportunity [when Circuit left the market] and saw that some of those customers might be looking for a home. All we could do is do as well as we can to see if they would give Walmart a try.”

Severson said that some Circuit City customers were “value shoppers” and that “we did do something different to get them” into Walmart. When Shapiro pointedly asked him what that was, there was silence from Severson and laughter from the audience.