BENTONVILLE, ARK. - Walmart's rise as the dominant player among national retailers in cellphone unit share started in 2001, when the high-traffic, high-volume retailer began to jettison the cellular kiosks that carriers operated at the front of its stores.
The company began to replace the kiosks with its own cellular departments, previously called Connection Centers but now called Walmart Wireless.
In the departments, consumers can seek assistance from a dedicated Walmart associate who activates phones onsite. Alternately, consumers can use a point-of-sale touchscreen to select the right phone, carrier and service plan for them.
The rollout "began to reach critical mass in stores around 2003 and 2004," a spokesperson said.
The carrier-operated kiosks, said Greg Hall, Walmart media and services VP, were "essentially a leased operation, but we saw it [cellular] as a viable business and a growth business, and we brought it back into the electronics department, using Walmart systems and investing a good deal in [associate] training." Creating the Connection Centers, he said "allows us to have iPhone, Droid and HTV Evo 4G."
In mid-2009, the national retailer took another step to raise its cellular profile, increasing its assortment by 30 percent, expanding the display areas, and redesigning the department, mostly by lowering the counters to improve interaction between customer and associates. The cellular department changes, part of a company-wide remodeling program called Project Impact, had been implemented in about 600 stores at the end of 2009. Project Impact and the cellular department redesign will be rolled out to the rest of the chain's stores over the next three years.
Coinciding with the remodeling, Walmart is stepping up its cellular commitment in other ways, such as teaming up late last year with prepaid MVNO TracFone Wireless to launch the StraightTalk brand of prepaid phones and monthly service, available exclusively through Walmart.
The chain is also launching a second Walmart-exclusive prepaid brand, Common Cents Mobile, which provides pay-as-you-go prepaid service in collaboration with Sprint. The service became available through more than 700 Walmart stores beginning May 15 and is available through Walmart.com.
And Walmart is expanding its mobile broadband selection with a dedicated area for pay-as-you-go prepaid mobile broadband. Products and services from Verizon, Cricket and Virgin, as well as an exclusive product from AT&T, rolled out in stores in May.
The retailer also expanded its smartphone assortment by almost 60 percent compared with a year ago, having launched the iPhone in late 2008. In June, the company plans to be among the first retailers to offer the country's first 3G/4G phone, Sprint's HTC-made Android-based Evo smartphone.
The changes - combined with a U.S. store count of almost 3,600 - helped propel Walmart into capturing the top market share in sales in the indirect channel, market research company ComScore statistics show. (See table below.)
From March 2009 through March 2010, the latest statistics show, Walmart led the indirect retail channel in the number of people, on average, who activated phones during the preceding three-month period. For the three-month period ending March 2010, 1.3 million people purchased one or more wireless devices from the retailer, ComScore said in citing its consumer surveys. Best Buy, Amazon, RadioShack and Target followed in that order.
Also abetting Walmart's rise to cellular prominence is the cellular industry's shift to mass-market status, analysts told TWICE. "CE and cellular have moved from luxury goods to necessity products," said Stephen Baker, NPD's industry analysis VP.
As a result, consumers expect to find cellphones in mass-market outlets such as Walmart, he and other analysts said.
Retailers such as Walmart realize that cellphones have such a broad penetration in the consumer market that they "drive more traffic into stores," Baker added. Today's consumers are also more willing to buy phones from outlets other than carrier-owned stores, he added. That in turn presents Walmart with "an opportunity to present itself as a disinterested third party" that gives consumers more choices of service providers, he said.
"It's all about choice," Walmart's Hall agreed. "We offer multiple options and showcase all the major carriers, compared to the carrier stores that offer only one choice."
Many Walmart stores, however, offer postpaid service from only three of four national carriers at a time, just like Best Buy and other national chains, although "some [Walmart] stores will sell all four major carriers if all are offered there," a spokeswoman said.
The industry consensus, explained one major retailer, "is that four carriers - with respective plans, handsets and other details - would offer too many options for the customer to sort out in the retail environment and too many options for the retail associate to explain in a timely and efficient manner."
For a specific retail location, therefore, retailers select "which three postpaid carriers represent an ideal combination for the specific retail location," the retail executive continued. At one location, for example, a retailer might include AT&T "at the high end for both rate plans and creditworthiness, with Sprint and T-Mobile with successively easier credit requirements and more competitive rate plans."
Walmart doesn't offer phones from regional postpaid carriers.