Last winter, Wal-Mart set off a price war with its deep discounting of HDTV products on Black Friday, the SuperBowl of shopping on the day after Thanksgiving. Best Buy and Circuit City are still recovering from the hits they took trying to keep up with the competition. How has Wal-Mart held up? It looks as though the company is doing fine, and getting ready to deliver more of the same.
In a story published yesterday, the Wall Street Journal reported that Wal-Mart sold about $22.6 billion of electronics in 2006 (not including the Sam’s Club stores). This was behind Best Buy’s leading $31 billion, but nearly double Circuit City’s $11.9 billion. Estimates are that Wal-Mart’s electronics sales will increase another 10% to 12% this year; assuming that this is based on total revenues, then the unit volumes will be increasing much more than that because prices have continued to fall.
Wal-Mart is not known for the technical expertise of its sales staff, so clearly they are not looking to compete with the pre- and post-sales support offered by specialty electronics stores. But we’re moving into a new buying segment now that prices have fallen to the point where the mainstream consumer feels that a flat panel or rear projection HDTV is affordable. Wal-Mart is clearly going after the buyers of smaller and less expensive models. If the price is right, many people are going to be very happy with choosing for themselves and setting up their purchase on their own, and pocketing the difference. As mentioned here before, Wal-Mart is selling top brands, including Samsung HDTVs. They have revamped their in-store displays, and are making it easier for customers to make a choice.
The bottom line is that I expect that the new buyers entering the HDTV market will be increasingly cost sensitive, and Wal-Mart is in a great position to deliver the bargains that these people will be seeking. I’d say that this is bad news for the lesser electronics retail chains, including CompUSA, Radio Shack, and Tweeter (which has sought bankruptcy in an attempt to recover).
Get ready to buy your HDTV bargain; get Professor Poor’s Guide to Buying HDTV, now available in paperback from Amazon or other fine booksellers.