Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now

×

CE Price Erosion Stymies Walmart Sales Growth In Recent Quarters

BENTONVILLE, ARK. –

While radical
improvements in Walmart’s CE
assortment and presentation have
contributed to significant spikes in
category sales, shrinking average
selling prices (ASPs) have tempered
growth in recent quarters.

According to TWICE’s annual Top
100 CE Retailers report, 2007 was a
watershed year for Walmart’s electronics
business. While average growth
was 10 percent for all ranked dealers,
Walmart’s CE sales soared nearly 23
percent to $17 billion as it completed
a department remodel, transitioned
from analog TVs to 1080p panels, increased
its Samsung SKU count, and
introduced Canon and Nikon d-SLRs
while adding only 80 stores.

Last year, following the introduction
of LED TVs, LG video, its first 4G
smartphone and yet another department
reset, Walmart’s CE sales rebounded
from 2009’s flat recessionary
results to pace average Top 100
growth of 5.8 percent.

But, as it has for many full-line and
specialty retailers, CE price compression,
particularly in TV, has been a
drag on Walmart’s recent sales performance.

For the first quarter ended April 30,
the company’s entertainment business,
which includes CE, movies, music
and books, posted a mid singledigit
decline, attributable to “price
deflation in key electronics items,”
said Walmart U.S. president/CEO Bill
Simon.

In a continuation of fourth-quarter
trends, the declines were partially offset
by “strong prepaid wireless sales,
especially in services,” Simon noted,
while lower ASPs, plus tax-refund
loans, helped fuel brisk TV unit volume.

Stephen Baker, industry analysis
VP for The NPD Group, believes that
falling ASPs, stiffer competition from
big-box retailers and

Amazon.com

,
and a revaluation of its floor space
and storewide assortment has forced
Walmart to reconsider its CE investment
strategy.

“They’re clearly less focused on CE
than a year ago,” he noted. “Walmart
found it challenging to grow the business
in the way they want. So while
they’re not running away from it, and
it’s still a growth opportunity, they’re
choosing to spend their treasure on
other categories and areas” – including

Walmart.com

, where CE is also a
cornerstone. As CEO Simon noted,
“Electronics remained a strong category”
during the first quarter, with
the TV, wireless and home office categories
driving increased traffic and
order size.

Featured

Close