Tuesday, June 10, 2008

Big Box Stores Keep Trying, Then Abandoning, Home Integration

Today, at virtually the same time, first Home Depot announced that they were giving up on home integration, then Wal-mart said they were going to take a kick at the cat.

So many big-box retailers have tried to do "smart home" installations, and so many have failed. Add Home Depot to that list, which includes Sears and Best Buy.The Wall Street Journal reports that Home Depot Inc. is abandoning installation initiatives in many categories, including home security, previously offered by ADT.Home Depot's Smart Home installation business was abolished before it even got off the ground. In 2005, the company hired Best Buy veteran Nancy Kielty as senior merchant for the Smart Home category. Kielty left the company for Wal-Mart in December 2007.

According to an article on CBS MarketWatch, Wal-Mart Stores Inc. is "very interested in expanding into installation and repair services in its fast-growing electronics segment."
I, for one, did not believe Wal-Mart would enter the installation business because I don't see how they can make money at it. A recent NPD study shows consumers aren't getting installs from retailers.And HomeDepot just pulled out of the security and smart home installation business.But the shear volume Wal-Mart would produce could keep integrators busy as subs for a long time, especially with the upcoming DTV transition.

While, as CE Pro's Jason Knott said, this move by Wal-mart is clearly a shot across the bow of Best Buy, I have my doubts about it.

For a start, I doubt Wal-mart's ability to manage dozens of regional subcontractors across their marketplaces.

Secondly, given Wal-mart's reputation for squeezing their vendors on terms, I have trouble imagining a small install contractor being able to survive on the crumbs that Wal-mart is likely to pay them.

Lastly, and related to my second point, I have grave doubts about the quality of the install work that would be done by anybody hard-up enough to take on Wal-mart as a client.

On the bright side, there are potential revenue opportunities for installers in the markets Wal-mart enters. There's a couple of companies here and in Calgary that have made decent coin in the last couple of years cleaning up botched jobs left behind by the clowns at Best Buy and a couple of local dealers who bit off more than they could chew. I foresee great labour opportunities coming in and un-FUBAR'ing Wal-mart AV installs.

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