Walmart is expanding its test of instore GE appliance shops to upwards of 26 discount supercenters by July.
The shops, dubbed The Appliance Market at Walmart, were initially installed in three Texas locations and are being rolled out to Walmart stores throughout the Houston and Dallas/Fort Worth markets.
The shops range from 700 square feet to 900 square feet in size, and carry between 50 and 80 good-better-best GE refrigerators, freezers, dishwashers, ranges, over-the-range microwave ovens and laundry pairs under the manufacturer’s Hotpoint, GE and GE Profile brands, Walmart told TWICE.
According to Ken Holland, GE Appliance’s general manager for sales at Walmart and Sam’s Club, the discounter will carry little backroom inventory, and all fulfillment will be handled by GE and its network of local delivery agents.
The front-of-the-store shops are owned by Walmart but are staffed by Flexi Compras, a Southwestern CE, appliance, furniture and auto chain that also provides in-store services to Best Buy and Albertson’s. The company will offer customers lease-to-own and other flexible payment plans, and shoppers can also choose from nearly 900 hundred additional SKUs through a catalog. All deliveries are free, although installation and haul-away services are extra for all but lease-to-own purchases.
The pilot represents the second appliance foray for Walmart and GE, which first trialed a front-of-the-store program in 2000.
“The previous test had some successful elements and showed that we could make our products accessible to a broad array of Walmart’s customer base,” Holland said. “The timing was just wasn’t right.”
The current effort differs in its better sales expertise, larger assortment and alternate financing options for cash-poor customers with low or no credit, a Walmart spokesman told TWICE. The chain has not yet determined whether it will add other manufacturers’ brands to the assortment, he said.
Holland noted that GE and Walmart have maintained a longstanding partnership that includes room air, microwave ovens and lighting, and described major appliances as a “natural opportunity” to grow the relationship. Long-term strategic discussions have been ongoing, he said, and specific talks about the viability of combining Walmart’s customer base with GE major appliances began about nine months ago.
The current test will determine whether the program will be regional or national in focus, and can be applied to other formats. “They see it as a substantial opportunity for them,” Holland said. “Proper distribution provides the end-user with the opportunity to find the right product with the right features.”
Meanwhile, independent dealers and buying group executives have expressed grave concerns over the appliance pilot, including BrandSource CEO Bob Lawrence. “Walmart has decimated margin on the CE side and recently reaffirmed its commitment to everday-low-pricing [EDLP]. This is not good for independent dealers or the appliance industry,” he said.
But David Trahan, retail president of Conn’s, the Texas-based appliance, furniture and CE chain, seemed less alarmed.
“It’s not the first test, and the product selection and credit offering is not that competitive with our offerings,” he told analysts during a first-quarter earnings calls last month. “Certainly we are concerned about any new competitor in the market, but the competition they represent is certainly something we can compete with.”