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Wal-Mart Widens Majap Test

Bentonville, Ark. — Wal-Mart plans to expand its major appliance pilot program with GE from 12 stores to about 100 by next spring.

According to the world’s largest merchant, early results at its Porter, Tex. test market have encouraged the company to more aggressively assess the category and its direct delivery deal with GE.

Wal-Mart plans to have its initial GE Large Appliance Centers in place in Texas, Oklahoma, Arizona and Florida locations by year’s end, and will roll the concept out on a national scale by spring 2001. The departments, which to date carry about 15 in-stock models and offer another 45 SKUs via kiosk for fulfillment by GE, will largely be located in Wal-Mart Supercenters, which can accommodate the approximately 900 square feet of required floor space.

The test, announced in August, encompasses Hotpoint, GE and GE Profile brand refrigerators, freezers, ranges, over-the-range microwaves, dishwashers, washing machines and dryers. The trial effort mirrors GE’s “virtual inventory” arrangement with The Home Depot in that the manufacturer is assuming all warehousing, delivery and installation functions.

Analyst Aram Rubinson, a managing director at PaineWebber, observed in a research note that given its scale and ability, Wal-Mart’s move into appliances “is bad for everyone involved, since it can steal share and compress margins at the same time.” He estimated that Wal-Mart could conceivably seize close to 7 percent of appliance market share assuming it rolls the program out to all of its stores and sells 25 units per week per location.