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Reasons Behind Walmart’s Changes

Walmart’s decision to overhaul its CE strategy is nothing new. It’s been changing its approach every few years in the past decade.
But its recent announcement, analyzed in this special edition of TWICE, will hopefully show the scope and the depth of the changes Walmart is putting in place and its possible effects on the entire industry.
Walmart’s decision to retool and revamp its CE department comes at a time when a confluence of events affecting the industry’s technology, brands and the economy are crossing.
From a competitive point of view, while all retailers in CE benefitted from the departure of Circuit City in the past year and a half, Walmart (and Best Buy) both benefitted the most.
Since suppliers didn’t have Circuit City, they turned to both Walmart and Best Buy. Walmart already began to switch to top-tier brands a few years ago across the board. And those brands have welcomed the retail giant’s attention.
In technology the linchpin of the industry has been HDTV in the past decade. 3D TV or no 3D TV, the TV category is becoming more of a commodity, which plays into Walmart’s strengths.
Consumers turned to Walmart during the height of the recession, and the chain will still emphasize price, a big fear for the industry. Will Walmart keep the CE consumers it attracted in the past year or two? That’s the main question.
But Walmart won’t have commissioned salespeople in its CE departments and the selection of product in some categories won’t be as deep as specialists.
But the world’s largest retailer rarely stands still and is never satisfied being No. 2 in anything – where it has stood for the past few years on our TWICE Top 100 CE Retailers – so it will be interesting to see how Walmart’s retooling will be received by consumers and how it may affect the industry.
My thanks to Walmart’s Gary Severson and his team for their cooperation, to the many industry execs who shared their thoughts and opinions about Walmart, and to the staff of TWICE, especially senior editor Alan Wolf, who headed our team coverage.
(This blog is an edited version of Steve Smith’s Viewpoint column in the June 7, 2010 print edition of TWICE.)