More so than in recent years, laptops have become the crucial traffic driver this back-to-school season with selections significantly expanded and prices drastically slashed.
Wal-Mart is offering a limited selection of Compaq Presario notebooks - featuring a 160 GB hard drive, CD and DVD drive, 3 GB memory and Windows Vista pre-loaded - for $298. Wal-Mart's stores not surprisingly have struggled to keep the item in stock.
The discount giant also has brought out a wide assortment of the Dell Inspiron 1545 laptop at $398 in multiple colors. Prices on the Acer 8-hour battery laptop were cut by $50 to $548. Overall, Wal-Mart is carrying 40 percent more laptops this B-T-S season, according to Bloomberg News.
"We know all students need solutions that integrate work, entertainment and portability," said Gary Severson, senior vice president of entertainment for Wal-Mart's U.S. division, in a statement. "Our increased assortment delivers more targeted offerings from great brands at dramatically affordable prices."
Wal-Mart's $298-notebook offering edged out Best Buy's earlier introduction of a 15-inch Acer laptop with similar specifications for $299 - another item that has been hard to keep stocked. Best Buy also is testing giving out laptops for free - or discounting elite models to $399 or lower - if consumers sign on to internet contracts. The move would be part of an increased emphasis by the retailer into higher-margin services.
"We are absolutely looking at that and see that as in play," chief executive officer Brian Dunn told Bloomberg News. "There are so many places people want a brand they can trust that will help them do things they want to do."
Staples also has boosted its portable computer selection by 50 percent as part of its B-T-S positioning.
A report on Bloomberg News theorizes the discounted price tags on laptops will drive sales of accessories such as external hard drives and bags that are up to three times more profitable than computers. Bob O'Donnell, an analyst with research firm IDC, said consumers last year bought 89 cents worth of accessories for every $1 spent on PCs.
Best Buy in the same vein is hoping to make money by bundling laptop purchases with Geek Squad services
While hardware margins shrink as prices fall, service margins "will always be higher," Robert Stephens, founder and chief inspector of Geek Squad, told Bloomberg News. "It's like the movie theater: They don't make money on the tickets; they make it on concessions."
Discussion Questions: Are laptops the right loss-leader choice for this back-to-school season? Is a mass chain such as Wal-Mart in a stronger or weaker position to capture added margin points elsewhere than specialty chains (AKA category killers) like Best Buy and Staples?