U.S. News

Target, Wal-Mart juice up electronics aisles

CHICAGO (Reuters) - Discount retail leader Wal-Mart Stores Inc and rival Target Corp are jazzing up their electronics aisles with pricier goods and new services to win over U.S. shoppers increasingly willing to pay a premium for better products.

New products being rolled out at Walmart discount stores include televisions that can connect wirelessly to Internet movie streaming services -- such as Netflix Inc and the Vudu service Walmart just bought -- and carry un-Walmart price tags of up to $2,000, Walmart executives said on Wednesday.

For the right electronics with the right features, even customers at a retailer that competes on low price are willing to spend, Gary Severson, senior vice president of the entertainment division at Walmart said during an interview.

“We are seeing a customer that is accepting of price points where there’s value at that price point,” Severson said. “It doesn’t have to be the opening price point to have value.”

Target, meanwhile, is remodeling its electronics sections to make it easier for shoppers to buy items such as video games and cellphones, while also better displaying large, flat-panel televisions.

It is also set to offer Inc’s Kindle in all of its stores on June 6, the lone bricks-and-mortar retailer to offer the top-selling product in the growing electronic-reader market.


Even during the recession, consumers were still willing to buy televisions, computers and other electronics, helping lift the U.S. electronics market to about $150 billion in 2009, said Stephen Baker, vice president of industry analysis at NPD Group.

“They are more of a necessity,” Baker said of high-tech electronics. “They are more of a mass market product.”

The shutdown of electronics retailer Circuit City last year also meant there was market share available for industry leader Best Buy Co Inc, No. 2 Walmart and Target, which is in the next tier of retailers in terms of electronics sales, Baker said.

One of the big areas of competition is in mobile electronics because consumers are increasingly used to being connected to the Internet no matter where they are.

Walmart is expanding its offerings of “smartphones” -- the ones that surf the Web, play music, let you check email and otherwise do more than just call mom.

It will also be the exclusive seller of a new pay-as-you-go mobile phone and data plan from Sprint Nextel Corp that will cost 7 cents a minute.

Target, meanwhile, is testing a partnership with RadioShack Corp in about 100 stores in which employees of the electronics chain sell cellphones in Target stores, said Mark Schindele, Target’s senior vice president, merchandising, for hardlines.

Target has been getting good feedback for customer-service in stores with the RadioShack employees, Schindele said in an interview last week at the remodeled electronics area in the Target store next to the company’s Minneapolis headquarters.

“We see that as a real point of differentiation at Target,” he said.

The company has not decided if or when it will roll out the RadioShack-run mobile phone sections to all its stores.

Target plans to remodel all of its electronics sections by June and, like Walmart, it is adding more items such as LED televisions.

It is also improving the display of its TVs, lowering shelves in the electronics section so employees can more easily see if a customer needs help and reorganizing its video game selection.

One key feature of the video game revamp is the introduction of 40-inch tall high-definition touchscreens that customers can use to find out which games are available, sorted by system, genre and rating.

The company is also installing new video game racks where the game is attached to a chord, allowing a customer to pull the item from the shelf and read information without having to get an employee to unlock a security case.

Finally, Target has moved demonstrators on which customers play video games to the end of the aisle, clearing the middle to give people room to browse.

Reporting by Brad Dorfman; editing by Andre Grenon