Up-to-date goods help charge up the volume in electronics - Wal-Mart Stores Inc - Wal-Mart

Discount Store News, June 7, 1993

One of the hallmarks of the Wal-Mart approach to stocking consumer electronics is that in many areas, the retailer chooses goods on an item basis from the entire range of mass market suppliers.

Wal-mart has changed from an also-ran in consumer electronics into a power merchandiser for a broad array of goods.

A few years ago, Discount Store News published a comprehensive report on Wal-Mart's CE merchandising that was pretty straightforward. After Emerson televisions and VCRS, Soundesign's rack systems, blank tape, and various accessories, there wasn't much to say.

That has changed. Today, Wal-Mart runs one of the most up-to-date and varied consumer electronics departments in the industry, and is well ahead of its two primary competitors, Kmart and Target. While Emerson is still a key brand here, Wal-Mart has diversified, moving aggressively into computers, video games, photo, software, and several other categories that either didn't exist at Wal-Mart in the past, or were barely discernable.

Wal-Mart's CE power merchandising hag paid off.

Leo J. Shapiro & Associates/DSN research indicates that Wal-Mart's attention to CE as a point of differentiation is yielding positive results.

Shoppers in Stockton, Calif., gave their first and second choices when shopping for home electronics products. Nearly twice as many (10.5%) named Wal-Mart as named Target or Kmart (6% each).

And, when asked if their outlet of choice was getting better or worse/no change, shoppers were far more likely to identify Wal-Mart as improving (two-thirds of Wal-Mart shoppers said getting better) than were Kmart or Target shoppers, who were split on the issue.

According to the research, Wal-Mart was the fifth most commonly shopped store for electronics. The discounter trailed specialty stores Circuit City and the Good Guys, each with at least 30% of shoppers citing the stores as their first or second choice. Wal-Mart also fell behind Sears and Ward, each with approximately 20% of shoppers mentioning the stores as their first or second choice. What makes the discounter's fifth place rank particularly remarkable is that Wal-Mart is relatively new to the market, and is located well outside of town.

After testing several approaches to the category, Wal-Mart seems to have settled on a large corral at the intersection of a middle power aisle and the rear aisle across the back of the store, near home fashions. The power aisle is stocked with most of the low-cost, high-turn items that require little or no service, like roadblock fixtures of children's video, audio and video storage, cut-out CDs, and so on. The corral merchandises the products that require security and service, like computers, new release video, audio and video equipment, video games, photo, and blank media.

The most vivid change in the department is Wal-Mart's impressive attention to the computer category. The chain has always been the most aggressive discounter courting this product area, first testing modern PCs about five years ago, then expanding those tests to most of its more modern stores and adding printers and other peripherals, and finally, after the purchase of Western Distributors, building a software business.

Today, the department makes a very powerful statement, with fully featured 486 PCs from Acros and Packard Bell (three skus each in the store we visited, but some Wal-Marts are merchandising as many as nine skus total), a full line of Epson printers (four in all, including one laser printer at a bit over $500), a 20-ft. run of computer software, mostly (about two-thirds) games and educational titles with a sprinkling of hit business titles like Quicken and DOS 6.O.

The software is supplemented with two endcaps, one of really down-and-dirty unbranded and untitled shareware, and another with cut-out name brand software. Even more impressive is the attention to add-on products.

Wang may have bombed with its line of mass market PCs, but evidently, it's back as a supplier of high-tech, low-cost peripheral products like add-on memory, back-up tape drives and fax modems, all of which Wal-Mart merchandises. (However, one retail observer noted that the Wang presence may have more to do with the failure of the Wang line of PCs than anything else. When the PCs failed to sell, Wal-Mart had to spend its return credit on something, the source speculated.)

Wal-Mart has added multi-media products like Sound Blaster and outboard speakers, as well as accessories like a home office desk organizer from Curtis and some Memorex storage units and mouse pads.

The chain has also added back-up carts from Fuji to its mix of diskettes from various leading suppliers. That is one of the hallmarks of the Wal-Mart approach: with the exception of computers and printers, the chain appears to pick and choose on an item basis from the entire range of mass market suppliers. By contrast, Target, for instance, has a massive program with one vendor, Memorex, throughout its computer accessory category.

The business end of the department has also been bolstered with the addition of a full line of Texas Instruments calculators, which run the gamut from entry level to advanced scientific. This is an outgrowth of one of Wal-Mart's more successful "Made In the USA" initiatives, in which it approached TI to bring some of its production back to the U.S. and in turn guaranteed a certain amount of business. That program has been expanded from an initial three skus to about 10.