Earlier this year, Walmart announced Project Impact as an all-encompassing effort to “crush the competition.” Although the effort hasn't been well-publicized, it's leaving a major impression in the retail marketplace.
Project Impact's goals include cleaner, less-cluttered stores; a friendlier shopping experience; and honing in on categories where competition can be killed. Having already sent most of their competitors in the category to the mat, Walmart is setting its sights on Toys 'R' Us. A weakened Kmart is an obvious target in general merchandise, as is Rite-Aid in drugs.
In a TIME Magazine report, Burt Flickinger III, managing director for Strategic Resources Group and a veteran Walmart watcher, said, “Project Impact will be the catalyst to wipe out a second round of national and regional retailers.”
With Circuit City gone, Walmart and Best Buy are battling for share of the consumer electronics/imaging market. Independents and regional players are taking heavy tolls as collateral damage in that war.
Project Impact is not just hype. The company has already opened several stores in the format and the difference between them and traditional Walmart stores is significant. More important, customers are responding favorably to the changes.
The retail war currently being waged in CE/imaging is not likely to let up anytime soon. Our competitors are in it for the long haul. It's no time for smaller players to sit back and watch. The stakes are too high. Independents can't put on blinders and keep doing what they've always been doing.
Either get in the battle or get out of the business. One way or the other, it's time to act, not sit on the sidelines hoping things will settle down. A few suggestions:
• Sell the full solution. One dealer recently told me that even with the competitive pricing on flat panels, some sold close to cost. Once he got the customer into the store, he could make a profitable sale—sometimes as much as a 32 percent margin—by adding installation, accessories, mounts and warranties.
• Shop the competition regularly. Find out what their real offers are. Look for their weaknesses. Explore their product line-up and pricing to find out where you need to be.
• Re-merchandise. Make sure your assortment includes a low-priced leader item in every category. You have to create traffic to your store. You won't have the chance to move a customer up to a more profitable piece if they think you're too high-priced. If necessary, look to third-tier brands for promotional products.
• Add more services and charge for them. Best Buy is putting its Geek Squad kiosks in the middle of the stores to get its customers to use more of their services.
• Add on. It's more important than ever to make sure your customers are aware of all the accessory products available that enhance the bigger-ticket purchases. Display them prominently and sell them aggressively.
• Extend the warranty. Studies show that 25 percent of all customers want to purchase extended protection plans when they make major purchases. Since you don't know which customers will buy, it's important to offer them to every customer.
From the time of David and Goliath, there have been many stories of the little guy beating his fierce opponent. In the classic book, “The Art of War,” Sun Tzu teaches that conflict is an inescapable part of human life. He teaches that to be an effective warrior one must be armed with knowledge and strategic vision. If you prepare your business as a well-armed leader with well-trained and well-equipped troops, your chance of victory is great.
Elly Valas is president of Valas Consulting Group. She welcomes your contact or comments at elly@ellyvalas.com or at 303-316-7569. Visit her Web site at www.ellyvalas.com.
Store Tour: Walmart's Project Impact Delivers a Wallop
Walmart's new “Project Impact” stores make an even more seductive bid for consumers strapped for cash, energy and time. With Walmart ads telling the nation's families that they can save an average of $3,100 this year by shopping at Walmart no matter where they originally shop, consumer technology dealers must pay attention to this new format, especially its thoughtfully merchandised electronics department.
Picture Business & Mobile Lifestyle recently toured a new Project Impact Walmart Supercenter in West Deptford, N.J., and was impressed not only by the imaging/electronics department but by the store as a whole.
One of the first things we noticed about the West Deptford Walmart was its setting. Far away from any retail power center, this new Supercenter stands alone on an expansive corner lot bordered on two sides by two-lane thoroughfares that connect a string of contiguous South Jersey towns. A new Rite Aid serves as gatekeeper at the Supercenter's main traffic entrance, but there are no other heavy-hitter retailers in sight. Locally, median annual incomes for families hover under roughly $50,000.
The expansive Supercenter façade has three entrances, marked Outdoor Living, Home & Living and Market & Pharmacy. An attached Subway restaurant caters to the customers.
Shoppers can easily orient themselves upon entering the store. Store signage is clear and plentiful, with huge overhead banners highlighting major sections and directional “street” signs posted at aisles intersections.
Whomever is merchandising the Supercenter electronics department knows the biz and has added needed interactivity to make CE sales on a Walmart sales floor: a Sony Blu-ray DVD demo capping the multi vendor Blu-ray display with 46 Blu-ray titles; a Sony soundbar demo; a digital photo kiosk; and gaming demos kiosks that promote Wii, Xbox 360 and Playstation.
Within its target scope for a cash-and-carry crowd, Walmart offers CE in good, better and best categories: in Blu-ray players (Magnavox, Philips, Visio, Samsung, Panasonic, Sony); remotes (from a $7 Universal model to a $70 Logitech Harmony 610); home theater systems (from a Philips DVD to Sony Blu-ray DVD); and HDMI cables (Monster, Sony and Philips).
Walmart does not sell iPhones here, but it has everything iElse: shuffle, nano, iTouch, and a plethora of iPod accessories and stereo systems. GPS and mobile phones were prominently displayed. Laptops by Acer, Dell, Toshiba and HP, plus a $248 Acer Netbook, anchor the computing section.
Our overall impression was that the department will work well enough for the CE/imaging commodity shopper and likely steal some sales away from retailers hoping to make a step-up sale.
—Janet Pinkerton
