Target, Wal-Mart Say ‘Best Buys’ Are at Their Stores

Discussion
May 13, 2010
George Anderson

By George Anderson

Target and Wal-Mart want consumers to know that they don’t have to go looking
at a big specialty chain store for the best buys on high quality consumer electronics
anymore. Both chains have invested in offering new consumer services and expanded
selections of higher-end products to provide shopping alternatives.

Wal-Mart, Reuters reports, has recently started selling televisions
that can wirelessly connect to online video streaming services. The sets that
retail in the vicinity of $2,000 are not what many have traditionally thought
of when it comes to electronics sold in the retail chain’s stores.

Gary Severson, senior vice president of the entertainment division at the
company, said, "We are seeing a customer that is accepting of price points
where there’s value at that price point. It doesn’t have to be the opening
price point to have value."

Target has remodeled its consumer electronics departments to accent its large,
high-def TV offerings and also to make shopping easier for mobile phones and
video games.

The chain, like others, has increasingly emphasized mobile communications
as the product offerings have moved beyond simple phones and become more integral
to the everyday lives of Americans.

Target is currently running a test Target with RadioShack operating mobile
phone departments in about 100 of its stores.

Mark Schindele, Target’s senior vice president, merchandising, for hardlines,
told Reuters that the feedback has been positive on the customer service
provided by the RadioShack employees.

"We see that as a real point of differentiation at Target," he told
the news service.

Target has also been quick to hop on the e-book bandwagon and recently announced
it would sell Amazon’s Kindle device beginning next month. At this point, Target
will be the only retailer selling the Kindle in brick and mortar stores.

Discussion Questions: Are Target and Wal-Mart poised to grab greater share
of the consumer electronics market in the U.S.? Which retailer engaged in
consumer electronics sales, in a big or small way, is impressing you these
days?

  • Target, Wal-Mart juice up electronics aisles – Reuters
  • Wal-Mart tries to close gadget gap with Best Buy – CNET
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    19 Comments on "Target, Wal-Mart Say ‘Best Buys’ Are at Their Stores"


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    Joan Treistman
    Guest
    10 years 5 months ago

    Consumers who are in the market for electronics are doing some or a lot of homework. While specialty stores promote greater knowledge and service, many shoppers aren’t having those experiences in the stores.

    Word of mouth, especially from close friends and the reviews on websites, influence consumers more than the store where they are buying the products. Hence, Target and Wal-Mart who have already established themselves as trustworthy can engage and sell prospective buyers of electronics.

    Steve Montgomery
    Guest
    10 years 5 months ago
    Both Target and Wal-Mart are known for their price position. Consumers who shop either store expect to find items with a good value proposition. Given their overall foot traffic, it is a natural for both retailers to attempt to grow this portion of their business. Electronics departments are a good way to spend time for those of us who like gadgets, while our shopping companions (wife, husband, kids, parents, etc.) look for what they came in to buy. There is always something new to look at or listen to. Whether we were in the market for a new whatever or not, it doesn’t hurt to look–especially in a store environment known for value. Once a customer is standing in electronics department starring at the various offerings with their myriad of features, options, etc. then to move them to a higher price point. As my first boss used to say, “get them in the car and then tell them the price of the accessories.” BTW–we were in the convenience retail business and not selling cars–but we… Read more »
    John Boccuzzi, Jr.
    Guest
    John Boccuzzi, Jr.
    10 years 5 months ago

    The key around big ticket technology items is strong customer support and service. Best Buy, for example, has that reputation and they deliver on it with the geek squad. I like Target’s approach of adding a RadioShack branded mobile outlet in-store. RadioShack is known for being experts in technology, so customers will feel confident. Target and Walmart would do well to stay focused on lower cost commodity technology items like gaming, mobile phones, Digital cameras, iPads, MP3s etc. I am not convinced that moving into $1,000-plus, ticketed items like big flat screen TVs is a good move. They demand lots of display space and have slow turns, not to mention the technology is always changing, so it is hard to keep up. One thought is they could bring them in on special for the holidays and them move them back out again in January when the rush is over.

    Liz Crawford
    Guest
    10 years 5 months ago

    This could spell trouble for Best Buy. Shoppers like to do their research before they buy electronics. With this brand communication, shoppers are likely to do their research at Best Buy with the Blue Shirt crowd and then go to Walmart to price compare and buy. A wild card factor is price guarantee by Best Buy…that says price war to me.

    Paul R. Schottmiller
    Guest
    Paul R. Schottmiller
    10 years 5 months ago

    I agree with thoughts above and in addition, Best Buy has “Him,” and Walmart/Target have “Her.” To the extent that Walmart and Target can create a shopping experience that appeals to “Her” and her influence in the home CE purchasing decisions they should continue to gain share.

    PJ Walker
    Guest
    10 years 5 months ago

    I have to agree with Liz on this point. Consumers are a lot more savvy now than just 5 years ago and will do most of their research online prior to stepping foot in any store. Also, with the advent of mobile apps like NeoReader and Red Laser, consumers can perform price comparisons on-the-fly with other brick-and-mortar and online stores.

    However, I see more males (especially 18-39) shopping at Best Buy for higher-end electronics. The BB experience fits this target demographic: the latest tech gadgets and corresponding accessories in one place with knowledgeable “blue shirts” on hand to engage in technospeak. As long as Best Buy offers the same brands at the same price as Walmart and Target, they will continue to bring in boys of all ages.

    Bob Vereen
    Guest
    Bob Vereen
    10 years 5 months ago

    One thing no one has mentioned is the number of stores Walmart has, especially in smaller markets where Best Buy is not operating. In those markets, Walmart can be–and undoubtedly is–the dominant electronics retailer.

    Robert Heiblim
    Guest
    Robert Heiblim
    10 years 5 months ago
    The issue here is not if Target or Walmart can take significant share in CE. They already have. On the other hand, their improvements and spread also have as much to do with consumer consideration. They need to keep pace with Best Buy or others on items like LED TV or consumers may not purchase or consider them. That said, a lot of the issue in CE remains in the demographics, which consumers are you selling as this determines what is sold. A current example is TV where ASP decline has outpaced sales growth on the small screen size, while sales of new LED and Internet connected large sets are growing nicely in both price and units. As one observes, these better sales are going to the specialists who can answer questions in the earlier days of adoption. For Walmart and Target, while they need to display these in order to get consideration, the current close rates do not even come close to the specialists. Of course this will change over time as these items… Read more »
    Ben Ball
    Guest
    10 years 5 months ago
    The high end electronics purchase is still a daunting one for the majority of consumers. We need reassurance in our decisions, although we do seek more and more of that online. BBY has brand position heritage and credibility on its side in this equation, along with specialty SWAS like Magnolia and the service, both customer assist in store and installation, to deliver on that positioning. Initiatives like the early intro of 3D HDTV only reinforce that. I was literally on a plane this week and overheard a guy go on for 30 minutes to his seatmate about the 3D demo he had just gotten in a Magnolia (BBY) and how it “blew Avatar away.” For Target/Walmart to meaningfully penetrate this market, one of two things has to happen. Either they build a credible challenge to BBY’s expertise and reputation in high-end electronics or consumers get so comfortable with the technology that they no longer value BBY type service over price. And the price points aren’t THAT different–yet. History says growing consumer comfort with the technology… Read more »
    W. Frank Dell II
    Guest
    10 years 5 months ago

    The cycle continues. Department stores dropped electronics as they could not compete with appliance stores. Supermarkets were challenged by convenience and drug stores and weathered the storm. Then came clubs and supercenters and they lost ground. Now dollar, limited assortment and natural food stores are knocking at the door.

    Wal-Mart and Target put in electronic sections and now they must compete with a large box electronics chains. The difference is simple: selection and knowledgeable store service (at least we are lead to believe). The Wal-Mart model does not work for all segments. The selection is too limited for some sub-categories. Yes, they will achieve sales, but the consumer is not fooled.

    Mel Kleiman
    Guest
    10 years 5 months ago

    Wal-Mart and Target will have their challenges if they are looking to take market share from the high-end buyer. But the one place I think they will win out, strangely enough, is in the area of customer service.

    I find that one of the most difficult stores to return something at is Best Buy. It has gotten to the point I will go anywhere else and pay a premium just to avoid the possible hassle if I have to return something I bought to Best Buy.

    Tony Orlando
    Guest
    10 years 5 months ago

    I had great experience with Best Buy’s Geek Squad, and would not use anyone else.

    Mark Johnson
    Guest
    Mark Johnson
    10 years 5 months ago

    It depends if you are looking for price or newest features. If you are looking for features and selections, I would say not so much.

    Cathy Hotka
    Guest
    10 years 5 months ago

    If price is the deciding factor, brick and mortar stores will lose most of the time. There’s loads of information available online and great deals to be had. Maybe the more important question is whether stores become showrooms for people to look, then buy elsewhere.

    Robert Straub
    Guest
    Robert Straub
    10 years 5 months ago

    I would say none of the above. Even though they have refined their return policy on large electronics, I still trust that Costco will have extremely competitive pricing and take care of any problems I may run into with a large electronics purchase in one of their club stores.

    Ted Hurlbut
    Guest
    Ted Hurlbut
    10 years 5 months ago

    I just don’t see Target or Walmart selling to the same consumer as Best Buy. The Best Buy customer tends to be earlier on the new technology adoption spectrum, and is prepared to pay a higher retail for higher perceived technology, features and quality.

    Neither Target or Walmart is set up to service this customer the way that Best Buy is, or offer the customer experience Best Buy can. Their customers are later-adopters, and are far more price driven. Their campaigns are likely meant to reinforce their position as selling electronics with mass appeal at low prices.

    David Biernbaum
    Guest
    10 years 5 months ago

    I don’t know if Walmart and Target are offering better pricing on consumer electronics or not, but I would not doubt the consistency. What I do believe though is that consumer electronics stores are doing a better job with customer service and how consumers are handled through the buying and decision-making process. For example, in my opinion, a consumer making a consumer electronics purchase is more likely to get the information he or she needs from a salesperson at Best Buy vs. in the environment at Walmart or Target.

    Ed Rosenbaum
    Guest
    10 years 5 months ago

    My wife and I went through this exercise about 15 months ago. We were shopping for a HDTV. We shopped at all the usual places; plus those we did not expect to look at such as Walmart. What we learned in this educational buying experience was one store could not give us everything we wanted. One could give price but not knowledge. Another could give price but not service. We decided to buy from the company giving us the better buying experience with price being important; but more important the knowledge we did not have.

    John Crossman
    Guest
    John Crossman
    10 years 5 months ago

    I like going to Best Buy as I see those shopping experiences as specific and focused where as Target shopping is more general. I may buy a DVD at Target but will choose Best Buy for larger purchases.

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