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Wal-Mart’s CE Strategy Doesn’t Faze Industry

Wal-Mart introduced a series of initiatives last week to improve its CE departments, including editing and upgrading its product offerings, introducing customer service and product training programs for employees, and redesigning its displays and in-store signage.

The retailer’s latest plans do not appear to have fazed the competition. Those on the independent side of the business give the impression that Wal-Mart’s attempt to upscale its selections with higher-end brands will not threaten their businesses.

“I think Wal-Mart’s moves would be more of a threat if their strategy was actually something they could achieve, but it will take many years to groom salespeople with the product knowledge and the ability to provide the kind of service that the independents offer consumers today. Honestly, we don’t expect Wal-Mart to devote the

of money that is needed to successfully accomplish this,” said Robert Weisner, director/executive VP, merchandising for the Nationwide Marketing Group.

Jim Ristow, executive director of the Home Entertainment Source (HES), a division of the Brand Source buying group, said that while he expects there might be some effect on the industry overall because “Wal-Mart is always a player in everything they do,” he doesn’t believe that his independent members will be the ones to take the brunt of any possible hit. He explained, “This will affect the industry. It will affect other large-box stores. It will impact us. We’re not so naive as to believe it won’t, but the impact will be much less than for box stores.”

A Best Buy spokesperson told TWICE that while the retailer generally doesn’t comment on the strategies of its competitors, Best Buy will “remain focused on delivering all the elements of home theater that our customers are looking for,” by continuing to concentrate on service and installations, particularly through its Magnolia Home Theater stores-within-stores that the chain launched last year in select locations to “offer a higher-end selection and different shopping experience.”

Wal-Mart said it worked with suppliers to edit and often expand its TV, camera and PC assortment.

Wal-Mart’s department-upgrade plans included dropping all analog TVs this month and offering new lines such as Vizio flat-panel TVs and better HTiBs from Sony and Philips. The retailer is also expanding its Samsung TV selection with more SKUs in larger screen sizes and adding 1080p LCD panels in sizes over 40W inches from Philips and Polaroid.

Skype VoIP service and accessories will now be available as well as new digital imaging offerings including SLR models from Canon and Nikon.

All stores are expected to receive bright new displays highlighting specific products with easy-to-read details, including a new camera bar and modular merchandisers for digital photo frames from Kodak and Polaroid. The chain, which last year performed a massive CE department remodeling, will now add more elements such as new in-store signage and shelf-talkers to further enhance its displays.

Wal-Mart announced its CE department initiatives just a day before reporting its sales and earnings for the first quarter of fiscal 2008, which ended April 30. Domestically, Wal-Mart Stores had net sales of $55.4 billion in the first quarter, a 5.6 percent jump from the same period the year before. It also generated an operating income of $3.9 billion for the first quarter, up 1.8 percent compared to the prior year period. Comp store sales for Wal-Mart Stores were flat for the quarter.

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