There's suddenly buzz that Wal-Mart has declared war on electronics retailers Best Buy and Amazon, but why? Of course it has. Keeping up with and conquering the competition is what retailers do and few do it better than Wal-Mart. With Circuit City gone, there's a void to fill and even in a down market there's enough business to raise all boats. Heck, even Sears is seeing a bump in online traffic.
The Wall Street Journal paid a visit to the Bentonville, Ark. headquarters and scored some great face time with the executives in charge of the category, all to coincide with the announcement that Wal-Mart is rolling out new merchandising and expanding CE departments in 3,500 stores today. But is this a pointed initiative or a continuation of existing policy?
Wal-Mart's electronics departments have steadily expanded over the years, moving from enclosed and secure areas in the center of the store to vast expanses of slick flat panel displays and portable technology. Just three years ago it embarked on a similar category upgrade. It sells some coveted Apple products, including the iPhone. Continuing to keep assortment fresh is an imperative for Wal-Mart to be a real player in this category. Refreshing departments in stores is business as usual, AND a move to take advantage of the market.
According to the Wall Street Journal, Circuit City's demise left $11.5 billion in sales up for grabs and that revenue is largely being split between Wal-Mart and Amazon. But don't get too excited about big bargains as these stores all vie for your business. Sort of. The margins on electronics are so thin that a $10 differential in price is often the entirety of the profit a retailer stands to make on the sale of even a LCD TV. Still for many, $10 saved is nothing to sneeze at.
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