Playing for keeps in fun and leisure - Wal-Mart - Merchandising: sporting goods and toys

DSN Retailing Today, Jan 26, 2004 by Doug Desjardins

Low prices and a wide selection of merchandise has made Wal-Mart the nation's top retailer in both toys and sporting goods and the company should add to its market share in 2004 as it continues to pressure specialty retailers in both industries.

With large toy sections in its approximately 3,500 U.S. stores, Wal-Mart has been the nation's leading toy retailer since the late 1990s when it surpassed Toys "R" Us. Despite a soft toy industry that's hovered around $20 billion in annual revenues since 2000. Wal-Mart has extended its lead through relentless growth and by jumping on trends quickly to beat toy specialists at their own game.

A case in point is the educational toy sector, which for years was owned by specialty retailers such as Zany Brainy and Toys "R" Us' Imaginarium outlets. Wal-Mart made a big push into the sector a few years ago with products from key vendors such as LeapFrog and its own private label and was able to co-opt a key point of differentiation from its retail rivals, Due in large part to Wal-Mart's entry into the sector, both Zany Brainy and Imaginarium are in the process of shutting down all 125 of their standalone stores.

Wal-Mart's sway in toy retail has been accentuated by the continued growth of its supercenters, which attract more frequent customer visits and generate a higher turn in toy sales. That phenomena has motivated No. 2 toy retailer Toys "R" Us to open small "Toy Box" departments in more than 1,000 A1bertson's supermarkets and KB Toys is taking a similar approach with toy sections in Sears stores and CVS drug stores.

And Wal-Mart continues to add to its lead by signing exclusive deals with studios like Walt Disney Co.. which teamed with Wal-Mart last year on a six-month exclusive on toys and licensed merchandise from its new Kim Possible franchise. And now that studios like Disney and Warner Bros. are leaving the retail business, they're showing a greater interest in signing exclusives with toy retailers like Wal-Mart that can deliver big sales.

Despite this success, Wal-Mart does have a few weak links. The massive volume of traffic during peak seasons and thousands of tiny hands grabbing products makes it difficult to maintain a sense of order in some stores. And employees are not always as knowledgeable as workers at competitors like Toys "R" Us, which has what it calls "Toyologists" in stores to help customers make buying decisions.

As in toys, the sporting goods department continues to benefit from Wal-Mart's robust expansion. Generally speaking, Wal-Mart emphasizes those categories with the large numbers of participants such as fishing, camping and team sports, but the retailer has also shown itself to be nimble enough to jump on emerging categories--as was the case several years ago with paintball and more recently with yoga.

Of late, Wal-Mart has also begun to supplement its broad assortment of opening price point merchandise with selective high price points and name brands in key areas. The addition of Titleist golf balls added some cache to the golf department, while the Icon Image brand of treadmills can be found in fitness and Penn reels merchandised under a glass display counter are a staple of the fishing department.

Wal-Mart will never be confused for a full-line sporting goods specialist such as Dick's or The Sports Authority, but with six times the number of stores as those two chains combined, Wal-Mart's sporting goods departments are a lot more accessible and they offer most everything all but a hardcore enthusiast requires.