CE retailing gets a new look - consumer electronics retailing at discount stores - column

CE Retailing Gets A New Look

Wal-Mart's new-look CE department, previewed at the opening of its "vendor store" in Wisconsin shortly after CES, highlights a trend that seems to be slowly making itself felt at discount stores nationwide.

The new department, which Wal-Mart may roll out to other stores, is an efficient and moderately upscaled approach to CE retailing. Wal-Mart, at least at this store, has narrowed its offerings in many areas, but expanded the number of merchandise categories that are represented.

A major example is an impressive foray into home office goods, including three fax machines, a computer system, word processors and electronic typewriters. Also, the company made a major statement in office accessories, adding computer disks, storage units and other ancillary goods.

But the more subtle changes may have been more significant. First, Wal-Mart installed a modest TV wall, with VCRs merchandised along with the monitors. While Wal-Mart offers a more limited selection than, say, Caldor, it has pruned it carefully.

Promotional televisions are offered on a palette outside the department, leaving CE clear and uncluttered. The same holds true for other promotional products, like battery-operated 5-inch black and white TVs (at $59.95).

While rack and compact systems are still offered, Wal-Mart has made a strong pitch for the component market, with a Pioneer display containing a narrow but sharply priced selection of receivers, CD players (remote and multi-disc), cassette decks and turn-tables. The combination of high-tech products and a quality brand name, along with a self-serve audition capability, was very impressive.

The new department seems to make use of what Wal-Mart has learned from its hypermarkets and SuperCenters, where CE is treated as a power department. While the company probably hasn't paid a dime extra to format the department, a lot of thought has gone into exactly where Wal-Mart should be in the business.

Evidently, the conclusion was that in many markets, Wal-Mart can be a dominant CE source. In cities considered too small for CE superstores, Wal-Mart can crush competition on price and even in selection. Even where superstores exist, Wal-Mart will be able to capture a big chunk of the "I just want a good CD player and I don't want to pay much for it" market by cutting its price to the bone.

In building up its audio department, Wal-Mart seems to be returning, at least on the face of it, to the golden years of discounting, when chains like Korvette's, W.T. Grant and Caldor all featured dominant and very aggressive CE selections. At that time, it seemed to me then, the audio products drew younger consumers into the store, and probably sold them more than a few records, shirts and jeans in the process.

Circuit City probably has nothing to worry about (yet), but Wal-Mart's new approach seems to say that CE might be returning to its former status as a power department in discount stores.

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