Wal-Mart to test home computers; seeks to boost home office - test market

Discount Store News, July 4, 1988

Wal-Mart to Test Home Computers

Seeks to Boost Home Office

BENTONVILLE, Ark. -- Wal-Mart is testing a low-end Tandy computer in about 50 of its more rural Sunbelt stores, a Tandy spokesman announced. The test was initiated in early June and will run several months, and is being conducted in "secluded area" stores in Texas, Louisiana, Arkansas and possibly Mississipi, the spokesman said.

The retailer is reportedly also planning to test more sophisticated computer systems from Blue Chip and two other manufacturers during the back-to-school season, according to Blue Chip president John Rossi. That test will probably involve fewer but more urban stores, reportedly 10 of Wal-Mart's 110 "collegiate" stores located in or in close proximity to major college towns. Whether the test will involve all three computers at 10 stores, or will place each in 10 different stores each is unclear.

Tandy's 1000 SX, modified for Wal-Mart (a second floppy disk drive has been added to the basic package that Tandy sells through its Radio Shack stores), will receive a lot of exposure over the next few months in markets never reached by Radio Shack. The 50 stores were chosen by Wal-Mart with the provision that they not compete with Radio Shack. "This will give us more market penetration," the Tandy spokesman said. "This should work out very well for both of us."

The 1000 SX will come packaged with some basic MS/DOS software, but additional software will be available only at Radio Shack. Servicing of the computers will also be handled by Tandy, at its stores and at any of its 150 service centers nationwide.

To date, Tandy has marketed its computer products exclusively through its own stores, with the exception of U.S Army/Air Force exchanges. According to the company, no more mass outlets are being planned, although Tandy is "exploring" other options.

According to a source familiar with Wal-Mart's consumer electronics operations, the retailing giant has pretty much steered clear of computers since a test a few years ago involving Texas Instruments and its ill-fated entry-level home computer. The motivation now is probably provided by Wal-Mart's increased presence in the booming home office market, and the various tests are reportedly aimed at determining an optimum product mix. Wal-Mart would prefer to narrow the selection to one or possibly two sku's, but is worried that such a narrow selection might limit sales. Hence the tests of four different products.

According to Blue Chip's Rossi, Wal-Mart will test two different Blue Chip sku's, Model 20 packages with either color or monochrome monitors. The package will include dual floppy disk drives and a hard drive, Rossi said. Blue Chip presently provides a similar package to Wal-Mart's Sam's Wholesale Club which retails for $829, and Hypermart USA also sells a Blue Chip kit. A package similar to what Tandy is supplying to Wal-Mart sells for roughly $770 at Radio Shack stores.

According to the source, Wal-Mart is positioning itself to "get more involved with the home office." To compete effectively in selling computers, he said, discounters will need "name brands, lower prices and better display materials."

Blue Chip, said Rossi, has been involved in training Sam's employees to sell its products, and the proposed test is an outgrowth of Wal-Mart's purchase of Blue Chip computers for its own internal use. Blue Chip will similarly train Wal-Mart personnel, adopt mass market packaging, establish service centers within 10 miles of each outlet, and provide an 800 number for consumer problems.

According to Rossi, the mass market has enormous potential in the computer market. "We think they [Wal-Mart] can sell one and a half units per store per week," he said. "If more brands are added the sales will go up. People need the good, better, best approach in this market."

"The big news here is that a major mass retailer has seen the potential of home computers and is willing to market them aggressively," he said, adding that several specialty discounters, like Newmark & Lewis and Circuit City, among others, have likewise made a commitment to the home computer market.