Wal-Mart dominates any number of categories at retail and the retailing giant is intent on adding to that list. Among the categories the Bentonville behemoth has targeted are apparel, home furnishings and consumer electronics. While it's been widely reported the retailer has had its struggles in the first two categories, it has done quite well in electronics.
Today, according to a Wall Street Journal article, Wal-Mart ranks as the number two retailer of consumer electronics in the U.S. with $22.6 billion in 2006 sales not counting Sam's. Best Buy is currently in the top spot with $31 billion while Circuit City is third at $11.9 billion.
Christine Augustine, an analyst with Bear Stearns, is looking for Wal-Mart to increase its sales of consumer electronics between 10 and 12 percent this year compared to seven percent for the category as a whole.
Wal-Mart has used its familiar low-price tactic to drive sales in its consumer electronics departments.
Rival Best Buy's response to-date has not been to get into a price competition with Wal-Mart, particularly in the area of flat-panel televisions, but focus on offering a broader selection and improving the customer experience.
Circuit City has played the price game and has suffered as a result. Low margin sales led to the company closing stores and laying off workers.
While Wal-Mart and price positioning are inseparable, the retailer has also expanded product selection and departments to attract a larger share of the consumer electronics buying market. The company has even made some modest steps to improve staffing to address questions posed by shoppers.
"We're not trying to tech it up (in departments)," Gary Severson, Wal-Mart's senior vice president of entertainment, told The Wall Street Journal. "They (consumers) want it to be fun, cool and functional," he said.
One area where Wal-Mart continues to suffer in comparison to CE specialists like Best Buy and Circuit City is in customer service and technical assistance.
Stephen Baker, vice president at NPD Group, told the Journal, "There's just no way you can explain some things through signs." He said Wal-Mart employees lack the expertise of employees at Best Buy and Circuit City "and they're not going to invest in that type of training."
Wal-Mart's Severson said, "I'm not here to tell you that we have completely trained sales associates. But we're working toward having a knowledgeable associate that can help the customers with the basics."
Best Buy with its Geek Squad and Circuit City with Firedog offer in-home service while Wal-Mart's part in the customer experience does not go beyond the front register.
Both of the consumer electronics chains also offer home delivery and setup services while Wal-Mart does not. Sam's Club has experimented with delivery and installation of consumer electronics but Wal-Mart has yet to test a similar service.
Discussion Questions: What is your analysis of Wal-Mart's consumer electronics push? What will it mean for other companies selling consumer electronics?