CE Price Erosion Stymies Walmart Sales Growth In Recent Quarters - Twice

CE Price Erosion Stymies Walmart Sales Growth In Recent Quarters

Author:
Publish date:

BENTONVILLE, ARK. –

While radical improvements in Walmart’s CE assortment and presentation have contributed to significant spikes in category sales, shrinking average selling prices (ASPs) have tempered growth in recent quarters.

According to TWICE’s annual Top 100 CE Retailers report, 2007 was a watershed year for Walmart’s electronics business. While average growth was 10 percent for all ranked dealers, Walmart’s CE sales soared nearly 23 percent to $17 billion as it completed a department remodel, transitioned from analog TVs to 1080p panels, increased its Samsung SKU count, and introduced Canon and Nikon d-SLRs while adding only 80 stores.

Last year, following the introduction of LED TVs, LG video, its first 4G smartphone and yet another department reset, Walmart’s CE sales rebounded from 2009’s flat recessionary results to pace average Top 100 growth of 5.8 percent.

But, as it has for many full-line and specialty retailers, CE price compression, particularly in TV, has been a drag on Walmart’s recent sales performance.

For the first quarter ended April 30, the company’s entertainment business, which includes CE, movies, music and books, posted a mid singledigit decline, attributable to “price deflation in key electronics items,” said Walmart U.S. president/CEO Bill Simon.

In a continuation of fourth-quarter trends, the declines were partially offset by “strong prepaid wireless sales, especially in services,” Simon noted, while lower ASPs, plus tax-refund loans, helped fuel brisk TV unit volume.

Stephen Baker, industry analysis VP for The NPD Group, believes that falling ASPs, stiffer competition from big-box retailers and

Amazon.com

, and a revaluation of its floor space and storewide assortment has forced Walmart to reconsider its CE investment strategy.

“They’re clearly less focused on CE than a year ago,” he noted. “Walmart found it challenging to grow the business in the way they want. So while they’re not running away from it, and it’s still a growth opportunity, they’re choosing to spend their treasure on other categories and areas” – including

Walmart.com

, where CE is also a cornerstone. As CEO Simon noted, “Electronics remained a strong category” during the first quarter, with the TV, wireless and home office categories driving increased traffic and order size.

Featured

Related Articles