Back to basics with leaner, upgraded CE department - K Mart Corp.'s Auburn Hills, Michigan prototype store's consumer electronics department

Discount Store News, Feb 1, 1993

From one perspective, it could appear that Kmart has decided to downplay consumer electronics. Apart from the addition of computers and software, the department is now smaller than it ever has been.

But it's more likely that the opposite is true; the retailer has simply spun off product categories that have grown significantly enough to stand on their own: prerecorded audio and video, photo/film/processing, and batteries.

That has left a department that can concentrate on the basics and experiment with more high-tech products, although Kmart has eliminated experimental high-ticket items like Sharp projection televisions, which it was selling at close to $5,000.

In the new format, Kmart is aiming at a total self-service environment, concentrating on smaller units that the shopper can simply drop into a shopping cart or comfortably carry out themselves such as portable TVs, VCRs, telephones, and boomboxes.

The walls that enclosed the CE department have been removed, opening up the department to the rest of the store. By doing this, the psychological barrier to casual shoppers has also been removed, making the department more accessible to core female shoppers and user friendly.

The overall look of the department also has been upgraded.

Black paint has been liberally applied. The sleek warehouse fixtures for boomboxes, an enlarged category, are in black, and so is the outside wall of the department, and the peg-board backs to the lower profile computer fixtures.

Brand names make a big statement in this store as well. In fact, popular CE labels like Sony, RCA, IBM and AT&T have their names printed on the outer wall of the department. A splash of neon signs grace the wall, too.

And for the first time outside Kmart's supercenter program, the discounter is offering both Sega and Nintendo hardware and software.

The elimination of the corral in CE provides the department with important endcap displays to highlight popular products, name brands and price. In addition, Kmart's use of dimensional end fixtures on the endcaps was used in CE for valuable add-on sales.

For example, a Sony boombox model was featured on an endcap with a $129 price tag. Batteries were merchandised on the two sides--normally dead space--permitting Kmart to make the endcap a three-sided fixture.

The new layout allows Kmart to be more of a classic power retailer, bulking out not-priced specials and communicating a one-stop, every day low price strategy more in keeping with its storewide message of convenience, selection and price.

The result of the product spin-offs is that storewide, Kmart now has a greatly expanded presence in consumer electronics as a whole, even if the core department is smaller. In photo (now renamed the Photo Imaging Center), which formerly comprised a single counter within CE, Kmart merchandises 35mm cameras, private label film, plus custom printing, a high-tech portrait studio, and Kodak's Photo CD.

The battery center, which debuted in the company's earlier Oak Park prototype, weds power cells for virtually every application, from cordless telephones to camcorders, many of which are also cross-merchandised in appropriate departments.

And finally, the company has broken out prerecorded audio and video, staples of the CE business, moving them to the front of the store where they will presumably draw more traffic (particularly teens) and, theoretically, drive more sales. Until two years ago, this was a sleepy by product of the consumer electronics business, and Kmart supported it only minimally. The explosion of sell-through video, driven by value-priced hit titles from Disney's Buena Vista Home Video division, may presage a similar renaissance in music CDs and tapes.

The newly designed CE department is located along the right wall of the store between sporting goods and the battery center with toys and home and office products, such as storage units, to its left.

The power aisle on which CE rests was home to a number of bulk displays that called attention to Kmart's everyday low price strategy and interest in portable CE products. One such display featured a 20-inch Philco color TV for $299.

"We want to be in stock with the best possible price," said Bill Underwood, senior vice president, general merchandise manager, hard lines. "From now on there will be no more waiting for someone to get the item for you. If you need help someone will help you but you can take it yourself."

That philosophy was evident throughout CE, from boomboxes, now being emphasized, to the new computers by IBM under the IBM PS/1 line. Other office related products such as a Sharp plain-paper fax, entry level fax machines, printers, and even personal copiers from Canon were merchandised together next to the IBM PS/1 line. The hardware is buttressed with a fun selection of accessories and supplies, as well as a more limited selection (eight feet) of software.

Like most discounters, Kmart has been dancing around the computer/office products category, waiting for its customers to catch up with the technology.