Wal-mart To Tackle Custom Installs: Hilarity Ensues!

CE Pro: Wal-Mart Teams with Dell on PC and CE Installs

Wal-Mart aims to take a piece of your business when it opens "Solution Stations by Dell" in 15 Dallas-area stores.The initiative (hinted at recently)is part of an effort by Dell to "further enhance a great customer experience," as the PC manufacturer said in an April press release.Wal-Mart will offer both in-store and in-home services to support not just Dell products but those from other PC and CE vendors. Among the services offered, according to Dell: "home television installation, home theater set-up, technology integration, and other services that can help customers build out their digital lifestyle infrastructure."

No disrespect intended to my friends at Dell, but I am keen to see how Wal-mart, who can't even maintain good looking store displays intends to tackle in-home AV and PC network installs.

Don't get me wrong, Wal-mart as a retailer has many strengths, but I just don't see this program playing to any of them.

From a competitive standpoint, for dealers who offer upscale services, Wal-mart’s entrance will affect them not at all.

For dealers who are willing to get paid by the hour to fix other companies’ screw ups it will be a bonanza.

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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.

Home Depot Abandons Security, Smart Home Installations

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.

Wal-Mart Eyes Installation Business

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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iTunes Is Number One Music Retailer

There is, it seems, no stopping them.

The RetailBridge: iTunes Takes Over Number One Spot In Music Retail

Last week, Apple announced that, based on data from market research firm the NPD Group, its iTunes Music Store had surpassed the retail giant to become the number one music retailer in the U.S. According to Apple, iTunes now has more than 50 million customers and has sold over four billion songs since its launch in 2003.

Don't expect Wal-mart to take this lying down, mind you. Is this the prelude to some serious jockeying in the online music biz?

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Wal-mart Sells House Brand Extended Warranty

Marketnews: Wal-Mart Offers its own Extended Warranties

A three-year product repair plan is available for products priced at $200 and up, which will include parts and labour, power surge protection, a “no-lemon” guarantee, and 24-hour call centre assistance. The plan is transferable, which means it can be included as part of a gift, or given/sold to someone else. For products under $200, Wal-Mart will offer the option for a two-year replacement play that offers new or refurbished products of “like kind and quality” if the original fails. Pricing for the plans will vary based on the item and its retail pricing.

Whereas even the largest CE retailers often farm out their warranties to 3-rd party warranty companies, Wal-mart has both the scale of business and the infrastructure to be able to profitably offer in-house extended warranties on their goods. The emphasis there is "profit."

When you look at the margin opportunity that warranty sales offer, combined with Wal-mart's existing margin strategies in CE, if I were the category buyer for any national retailer with a strong CE presence, I would do two things: 1) shudder, and 2) strongly recommend to the senior operations execs that they turn up the heat on warranty sales in our own company. If you have to compete with Wal-mart on price in commodity businesses, you'd better be maximizing your add-on sales opportunities.

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Wal-mart Dumps HD-DVD: That Would Appear To Be It

TWICE: Wal-Mart To Back Blu-ray

Bentonville, Ark. – Wal-Mart will back Blu-ray exclusively in its 4,000 Wal-Mart and Sam’s Club stores in the United States by June, the chain said in a statement on its Web site this afternoon.

Three strikes in one week for Toshiba. I don't know what else to say about this.

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Simpsons The Movie on DVD, and Wal-mart's commitment to Hi Def

So yesterday, I had a reason to be at Wal-mart, and picked up the DVD release of The Simpsons: The Movie. Since it's impossible for me to be in a retail store without analysing it, here's what I noticed about their software department.

The Simpson's: The Movie was $24.88 for the DVD, but there was a gift set for $27.88 that included little plastic figurines of the Simpson family. I might have bought that instead, since I'm kind of a sucker that way. Except: the gift set was only available in 4:3 full screen, not widescreen? Seriously, who still has a 4:3 television?

Wal-mart seems fully committed to pushing both Blu-ray and HD-DVD. The display cubes in the center of the main aisle were almost entirely stocked with new release Blu-ray and HD-DVD titles, and all the end caps facing out were 100% HD format discs. Your average Wal-mart employee might not be able to explain the benefits, but as a company they are fully committed to putting both formats in front of shoppers and watching what happens.

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First impression of the new Mega Wal-mart in town

For what it's worth, I had cause to go to the new Wal-mart mega store yesterday. It actually freaked me out a little. I’ve never had agoraphobia before, let alone inside a building. It’s total square footage is bigger than the town of Jasper, I think.

In the electronics department, they had an 8'x8’ cube of Blu-ray titles in the aisle, but no Blu-ray or HD-DVD players on display, not even demos. I have no idea what that signifies.

The store has only been open a week, and it already looks like shit. I'm pickier than the average consumer when it comes to merchandising standards, but Wal-marts always look dingy and gross. And this one is brand new.

Despite having a dozen self-serve checkouts, only half of them were open, despite it being a total Gong Show in the store. I realized shortly after that their precariously thin staffing meant that they couldn't round up enough clerks to supervise the self-serve checkouts when they go wrong (which happens about every 30 seconds).

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Wal-mart and Toshiba go bananas with cut-price HD-DVD player

Following up on the story of Wal-mart and Best Buy teaming up with Toshiba to offer a $99 HD-DVD player for sale in an effort to strike a blow in the format war, reports are coming in that 90,000 units went out the door.

Videobusiness: HD DVD set-top player $99 sales moves units

The HD DVD format significantly pumped its installed base over the weekend, as dueling store clearances sold an estimated 90,000 Toshiba players, according to sources close to retailers.
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That tally covers Friday to Sunday sales of Toshiba’s second-generation HD-A2 model, which Wal-Mart and Best Buy sold for about $99 on Nov. 2. That’s $200 less than Toshiba’s $299 list price and $100 off widespread retail pricing of $199.
The $99 players made up most of the 90,000 units sold, a source said.
Within three days, Toshiba corralled nearly as many sales as the best-selling stand-alone Blu-ray Disc player has sold since its launch. Sony’s dominant Blu-ray set-top, the $499 BDP-S300, has shipped about 100,000 since it bowed this summer.

It was a dirty Hail Mary ploy that reeked of desperation, but it appears to have been a winner.

Will this tip the format war's teeter-totter in HD-DVD's favor for good? Maybe.

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A $99 HD-DVD player!? Wal-mart totally goes there

TWICE: Wal-Mart Promos HD DVD Player At $99

Wal-Mart will offer Toshiba’s HD-A2 HD-DVD player tomorrow for $98.97 as part of a “pre-Black Friday” promotion.
The price point represents a dramatic new low for Toshiba’s entry-level model, which was recently reduced to hit a suggested $250 retail and is currently being sold by Amazon.com, Circuit City and Costco for just under $200.
The HD-A2 is a closeout model that is being replaced by the more fully featured HD-A3.
Wal-Mart is also selling three HD-DVD titles for $14.96 as part of its one-day promotion.

There are some cardinal takeaways here to understand the method to Wal-mart's madness:

*In conjunction with other loony prices like a $998 50-inch Sanyo plasma, Wal-mart is effectively buying up the lowest echelons of the shopping public. Unlike Best Buy, Wal-mart has plently of high margin apparel, candy and other goods with which to make the add-on sales, so they really can make it up on volume.

*Toshiba is taking the low road to winning consumer acceptance for HD-DVD, since Blu-ray players all still start at $499 and up. But...

*This promotion tells me that Toshiba was still sitting on tons of closeout HD-A2, and were getting nervous as the rollout for new models prior to Christmas approaches. I'm sure that Toshiba was all too happy to whore out last year's stock to Wal-mart, much to the dismay of other national accounts who are still sitting on inventory.

Let the Christmas Bloodbath begin!

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Wal-mart offers DRM-free downloads: is this the Fat Lady singing for DRM?

I know that it galls many of us to cheer anything that the Beast of Bentonville does, but with Wal-mart being the prototypical 800-lb gorilla of the retail marketplace, what they choose to support tends to have some momentum behind it.

TWICE: Wal-Mart Launches DRM-Free Music

Wal-Mart officially added music without digital rights
management (DRM) software to its download service, joining a growing movement to
provide digital “unprotected” music that can be downloaded to almost any
portable digital device.
Wal-Mart will sell DRM-free songs from record
labels including Universal Music Group and EMI for 94 cents each or $9.22 per
album at www.walmart.com. The songs can be
played back on devices including the iPod, iPhone and Zune.

...

The current Wal-Mart DRM-free catalog includes a few
hundred thousand songs out of a total of more than 2 million songs (including
DRM-protected songs) on the site.

The DRM-Free option keeps gaining ground in the marketplace. I would characterize Wal-mart's participation not so much as the Last Nail in DRM's coffin, but more like a Stake through DRM's heart.

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What Dell needs to do if it insists on being available through retail channels

Despite my initial rude comments about Dell's decision to be available through Wal-mart and other big-box retailers, it is possible for them to successfully execute this strategy.

One great big important key to that plan will be to take customer service out of the hands of the retailer. Customer satisfaction is something so precious, it would be an error to delegate it to someone else who lacks the same buy-in and commitment to your values.

More and more, CE manufacturers are taking personal responsibility for customer service, which is a smart move considering how many mass merchants totally suck at after-sales support. In order to short circuit frustration-based refunds, and the margin drain that Wal-mart's merciless vender-return programs causes, each box needs to have a bright, friendly label printed on the inside flap in font so large even the semi-literate can't miss it:

Is there a problem?

PLEASE DO NOT TAKE THIS UNIT BACK TO THE STORE!

Call 1-800-WWW-DELL and we would LOVE to make it all BETTER!

Note: it probably wouldn't hurt to have this pledge reprinted on every third page in the owner's guide, and maye even a sticker on the front of the machine itself.

It would be trite if it wasn't so true, but take care of your customers and your customers will take care of you. Referral business bought me a house. If the customers have warm, fuzzy feelings for your company, their support will take you far.

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An important lesson about putting all your eggrolls in one basket

Many people like to pontificate about how China is an eccnomic powerhouse that will eclipse us. However, until their billion and a half people get the hang of conspicuous consumption (and they will, I have no doubt about that), the Yin to their Yang is that they need us to buy all their crap from them. If we don't, it means trouble for them. The Wall Street Journal has a nice piece about the impact on chinese factories of Wal-mart reducing their forecasts. *Subscription required to read the whole thing.*

WSJ.com: Wal-Mart Sneezes, China Catches Cold
SHANGHAI -- Several months ago, Chinese clothing executive Shao Zhuliang got bad news from his U.S. agent: Wal-Mart Stores Inc., his biggest customer, wouldn't be placing any orders for the spring 2008 season.
Now, Mr. Shao says, he is scrambling to line up other buyers from Europe, Japan and South Korea to keep production lines running this summer at Boshan Linar Garments Co. in eastern China's Shandong province.
Wal-Mart "said they had inventory piled up over there," says Mr. Shao, who heads Boshan's sales department. "It's always hard to make money from Wal-Mart orders, but without them, we are finished."


*since the WSJ has been so nice as to link several of my blog posts through their aggregator, I thought it would be fair to stop infringing on their copyright by reprinting their articles in full, as I have been.

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Something's wrong with Dell

WC Varones is even more vitrolic about Dell's announcement that their computers will be sold in Wal-mart than I was.

WC Varones: Short Dell

This is a last gasp ploy by a really screwed-up company.

He also lists the key reasons why Dell was successful, and why none of those reasons still apply today.

Like me, he just doesn't see it going well for them.

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Wal-mart to sell Dell computers

TWICE: Wal-Mart To Carry Dell Computers
Bentonville, Ark. – Dell has opened up distribution to Wal-Mart Stores in a dramatic expansion of its retail strategy.
Beginning June 10, over 3,000 Wal-Mart and Sam’s Club stores in the U.S., Canada and Puerto Rico will carry up to two Dimension desktop SKUs. The multi-media models are being built exclusively for Wal-Mart, and will be sold in brick-and-mortar stores only in package bundles for under $700.

...

According to a Dell spokesperson, the agreement with Wal-Mart represents the first step in a new, overarching global retail strategy. The new plan follows a shakeup of senior management, and CEO Michael Dell’s declaration that the company must look beyond its traditional consumer-direct model, as it endeavors to restore its marketplace dominance. Dell continues to sell its custom-configured PCs direct through its Web site, catalog, kiosks and lone retail store in Dallas.

Do you know what this strategy is called? It's the Throw Everything On The Wall And See What Sticks strategy. By basically opening their distribution to Wal-mart, QVC, Costco and any other big box store who can write a cheque, Dell is looking for a quick and easy boost to their numbers by being available everywhere. Dell will be in Best Buy before you know it, mark my words.

As far as choosing Wal-mart to promote their brand, there is no truth to the rumor that Michael Dell thought that the level of service offered in their call centers wasn't low enough, and he figured only some poor disenfranchised soul in a blue smock could take the service level down a notch or two.

I tried to come up with some insulting variation of the iconic "Dude! You're getting a Dell!" but I've got nothing...

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Wal-mart taking their electronics department upscale

Well, maybe not upscale like I think of it: they won't be building half million dollar home theatre demo rooms or anything, but they will be bringing the latest and greatest advances in gadgets to the masses.

TWICE: Wal-Mart Upgrades CE Departments

Bentonville, Ark. — Wal-Mart is enhancing its CE departments with improved assortments, signage and in-store support. The chain is rolling out the changes system-wide beginning this week.
Newly added product lines include Skype VoIP service and accessories, Vizio flat panel TVs and better HTiBs from Sony and Philips. Wal-Mart will also expand its selection of Samsung TVs with more SKUs in larger screen sizes, is adding 1080p LCD panels in sizes over 40W inches from Philips and Polaroid, and is augmenting its digital imaging offering with SLR models from Canon and Nikon.

The key here is "in-store support" as the article goes on to explain:

To prepare for the enhancements, Wal-Mart said its CE department sales associates completed an “aggressive” customer service and product training program this year.

That sounds great, but the proof, as they say, will be in the pudding. Initiatives formulated by key decision makers at large organizations mean well, and are usually full of substance. By an large, people at the VP or Director level deserve to be there, and their ideas are usually good ones. Where things go horribly, horribly wrong is in the execution of these initiatives. As it filters down the ranks from the executive to the operations level, the commitment and buy-in can be diluted, until the game plan rests solidly on the shoulders of some poor soul in a blue smock who just doesn't get it, and will go and do things "the way we've always done them."

Still, Wal-mart is trying to bring their CE game up a notch, and that should make other retailers sit up, take notice, and look hard at things that they can do to improve their own operations.

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Wal-Mart Tightens The Belt At Sam's Club

Bloomberg: Wal-Mart Will Cut 1,200 Management Jobs at Sam's Club
April 26 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, will cut 1,200 salaried jobs at its U.S. Sam's Club stores by using fewer managers with more responsibilities.
About 3,000 jobs will be condensed into 1,800 positions with higher pay, spokeswoman Susan Koehler said today in an interview. The change will improve customer service by making operations more efficient while adding to labor costs, she said.
The affected managers have until May 2 to accept jobs elsewhere in the company or take severance packages, Koehler said. The company expects about 250 employees will take buyouts.

It is a consolation that the remaining 1,800 managers whose jobs will now officially suck even more are recieving greater compensation, and might now even crack the $30K ceiling.


Fortunately for any Sam's Club managers who were afraid that their seven years at ninja college might go to waste there are immediate openings in Wal-Mart's International Intrigue Division.

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Wal-mart Hiring Intelligence Agents, Ninjas, and Jackbooted Thugs

Not content with a crack security team of overweight semi-retired ex-Commissionaires, Wal-mart, flush with success in banking, medicentres, and quasi success with health food, is getting into the counter-espionage business.

Globe and Mail: Wal-Mart recruiting former intelligence officials

BENTONVILLE, ARK. -- Wal-Mart Stores Inc. has been recruiting former military and government intelligence officers for a branch of its global security office aimed at identifying threats to the world's largest retailer, including from "suspect individuals and groups."
Wal-Mart's interest in intelligence operatives comes at a time when the retailer is defending itself against allegations by a fired security employee that it ran surveillance operations against targets including critics, dissident shareholders, employees and suppliers. Wal-Mart has denied any wrongdoing.
Wal-Mart posted ads in March on its own website and sites for security professionals, including the bulletin of the Association of Former Intelligence Officers, for "global threat analysts" with a background in government or military intelligence work.

You know those straight-to-DVD sci-fi movies that feature a Capitalist Dystopia where corporations rule the world (and sometimes whole solar systems) and have private armies of faceless thugs in mirrored visors who enforce the will of the Board of Directors? Usually these movies star Rutger Hauer as a bitter police detective and/or Mila Jovovitch, as some sort of slinky, leather-clad assassin.

I love those kind of movies.

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Wal-mart going into India? Who should we feel sorry for?

Journalist Gary Weiss has a new article in Forbes about Wal-mart's proposed venture into India.

Sorry, but I've never been a big fan of Wal-Mart's business practices. I love the stores--they're the first place I go when I run out of glue and kitty litter--and I even owned the stock some years ago. But Wal-Mart's aggressive attitude toward suppliers and its impact on small business give me an uneasy feeling in the pit of my stomach.
It's a bit how I feel when I see a Rottweiler sniff a kitten. Is it going to lick the kitty, or turn it into lunch?
Wal-Mart's (nyse: WMT - news - people ) plans to invade India give me just that kind of lump-in-the-gut feeling.

I'm not a fan of Wal-mart, though not in the same league as the leftie chest-thumpers.
My question is not can India survive Wal-mart, but can Wal-mart survive India?

Wal-mart is very good at what it does, but by nature of its mass, it is hidebound and rigid, and not especially good at adapting to conditions and situations that are off its planogram.

Wal-mart's entrance into Canada was checkered by gaffs and blunders caused by their master plan hitting the iceberg of the reality of a different retail market and a different culture. The most colorful were the english language-only Grand Opening flyers circulated in french speaking Quebec. It took time and millions of dollars to turn the boat around and get Wal-mart in synch with Canadian consumers.

India is a very different place from the US or Canada. Wal-mart's corporate myopia may not recognize that initially.

Don't expect Wal-mart to be able to barge into India without hemmoraging a lot of cash. I think that in the long term, they will be able to adapt, but they will learn some painfully expensive lessons before they gain anything like market dominance.

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Wal-Mart: now greener, and more warm and fuzzy!

Bloomberg: Wal-Mart picks sites for stores reported on Dealbreaker:

Wal-Mart picks sites for stores (Bloomberg)Wal-Mart continues to demonstrate a high level of PR brilliance. The company has already put itself on the "right" side of issues like global warming and the minimum wage, as it blunts the constant criticisms against its business. Now the company has announced that it will open stores in several sites where there's a high level of unemployment, so that the stores will represent "jobs and opportunity zones". And the company will also start building locations on environmentally distressed properties as well as abandoned malls, so as to reduce the company's ecological footprint.

If by "environmentally distressed properties" Wal-Mart means former gas station locations and other industrial zones where the soil is contaminated by toxins and carcinogens, then in one stroke their strategy could breathe new economic life into run down areas, and at the same time reduce Wal-Mart's exposure to long-term pension payouts. Leverage an average employee lifespan of less than 50 years with reduced health benefits, and that would really shape up the bottom line!

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