ROGERS, ARK. – Over the last 10 years and three department chiefs, Walmart has transformed its CE stance from a commodity offering into a business built on tier-one brands and new technologies, while still maintaining a low-price proposition.
The strategy has largely worked. According to TWICE’s annual Top 100 CE Retailers Report, the country’s second-largest electronics retailer has, with rare exception, managed to ride out the worst of the Great Recession with mid to high single-digit sales gains, and has been narrowing the gap with No. 1 CE seller Best Buy.
But even Walmart wasn’t immune to last year’s CE malaise, which slowed industry growth to a crawl while No. 3 contender Amazon.com loomed larger in its rearview mirror.
To help reignite sell-through for this $22 billion business, which represented about 8 percent of total Walmart U.S. sales last year, the discount chain has launched a series of product and service initiatives, and is resetting its electronics departments to place new growth categories front and center.
“Electronics is a great piece of business for us,” Walmart U.S. president/CEO Bill Simon told TWICE during a media briefing here last month. “It always has been.”
That said, executive VP and chief hardlines merchant Steve Bratspies acknowledged that CE currently “is a very challenging industry, although we feel good about our share position, our customers like it, and we’re not retrenching.”
Rather, said Simon, “We’re trying to look at the segment holistically. Forget online/offline, it’s more about assortment offering and connectivity.”
The most noticeable change will be the department itself. “We’re relaunching and redeveloping the physical space in-store,” Simon explained, in a program under entertainment senior VP Laura Phillips that’s referred to internally as a CE “reboot.”
Specifically, “What you’ll see is a new set in our stores that better adjusts our space-to-sales ratio to make sure we’re leaning in where the growth is,” Bratspies explained. “Connected businesses like wireless and tablets are going to have a more dominant presentation in a more prevalent location than they have in the past to make sure the customer knows what we have.”
The changes were evident during a tour of a Walmart laboratory store here near corporate headquarters, where an illuminated wearables display featuring brands such as Fitbit, Garmin, Jawbone and Samsung Gear held center court. Bratspies said the wearables display is presently being tested and won’t appear in all stores, although smartwatches and fitness bands will. “It’ll be a big gift item for holiday,” he told TWICE.
Elsewhere in wireless, the prepaid cellular section was extended to a full-length aisle, and a new tablet gondola featured live display models with corner fasteners to prevent shrinkage while still allowing access to the screens.
Other display changes include an interactive Samsung endcap featuring a 60-inch LED TV, Sound Stand and soundbar; a revamped camera bar that can be found in 1,500 stores; and gaming cases topped with an array of 55-inch LCD panels displaying branded messaging.
The Samsung endcap, like an older dedicated Apple section, are part of an effort to stage “bigger brand presentations,” Bratspies said.
Also changing are the product adjacencies, which will now have a more “natural” flow, he noted, such as the placement of a Beats by Dr. Dre headphone section near an iPhone display. Veteran technology department manager Charlie Tuchel also pointed to an effort to group all computers, peripherals and related accessories together within a circular area, and to put tablets in close proximity to notebooks.
The point, stressed Bratspies, is that “we’re moving space around, not shrinking it.”
And what of that traditional tentpole category, TV? “People are social and the TV business is still important,” Bratspies said. “We’re happy with our TV wall.”
Simon is particularly proud of a recent partnership with Element Electronics, a South Carolina company that produces 32- and 40-inch TVs for Walmart under its “Made in U.S.A.” initiative.
“We’re selling the first TVs in a long time that are assembled in the U.S.,” he said. “They cost less than imports and are doing phenomenally in our stores.”
Walmart also plans to “dip our toe in Ultra HD,” Bratspies added. “There’s not a lot of content, but we expect prices to come down very rapidly.”
Other recent initiatives include a post-purchase price-match program called Savings Catcher that will search competitors’ circulars and reimburse customers who paid more for the advertised products.
The chain has also entered the used video game business by buying back customer’s titles, and is gearing up to begin selling pre-owned games later this year.
And elsewhere on the wireless front, Walmart has permanently cut prices on the iPhone 5s and 5c; launched an exclusive prepaid cellular offer through Sprint for unlimited voice or text for $20 a month; and bought Simplexity, the cellular services provider that operated online mobile stores for hundreds of retailers before filing for bankruptcy in March.
The acquisition, said executive VP and chief information officer Karenann Terrell, will significantly reduce activation wait times in store and “provide a seamless online option that will walk customers through the activation process.”