In surprise move, Wal-Mart plans to sell 3-D TV this year
NEW YORK (MarketWatch) -- Retail giant Wal-Mart Stores Inc. said it plans to sell 3-D televisions before the crucial holiday season this year, in a move that highlights an increasingly head-to-head competition between its Walmart chain and such retailers as Best Buy.
3-D and moreMarketWatch's Andria Cheng learns that 3-D televisions will be in stock at Walmart earlier than had been expected. Plus: Almar Latour and Jessica Vascellero talk with Stacey Delo about the latest in the Google-China showdown.
The Bentonville, Ark.-based discounter /quotes/comstock/13*!wmt/quotes/nls/wmt (WMT 55.65, +0.04, +0.07%) plans to sell some 3-D TVs this year in select stores, Gary Severson, head of Wal-Mart's entertainment division, said in an interview, declining to specify which brand manufacturers the company is in talks with.
"We are going to be instrumental in helping to bring the costs down and bring more affordable 3-D experience to customers," Severson said in the interview. "We are excited about it."
Wal-Mart has added flat-panel televisions and other consumer electronics from Sony, Samsung to LG and Apple to expand its share of the electronics business and drive traffic to stores. The entertainment division, which includes the electronics category, has consistently been among the better performers even as the U.S. namesake stores saw three straight quarters of same-store sales declines, analysts said.
"It's impressive," said Joe Feldman, an analyst at Telsey Advisory Group.
"It's more evidence of their desire to be a more serious player in the electronics space. They are trying to be more current carrying the latest products that consumers want. It puts pressure on Best Buy /quotes/comstock/13*!bby/quotes/nls/bby (BBY 42.54, -0.12, -0.28%) ," Feldman said.
Historically, the Walmart chain would have been expected to carry consumer electronics such as DVD players once they'd reached 40% to 50% household penetration, Feldman said. The expansion of electronics sales by Walmart stores and other mass merchants such as Amazon.com have in part helped to put retailers such as Circuit City out of business, he said.
Wal-Mart doesn't break down its sales by categories. The entertainment division, which includes electronics and toys, generates about 13% to 14% of its more than $400 billion in sales and is Wal-Mart's second-largest unit after food, BMO Capital Markets' analyst Wayne Hood said.
Severson said 3-D TVs, along with high-definition products and laptops and cell phones, will continue to "build momentum" for Wal-Mart and be its entertainment unit's growth drivers. In a move that may rewrite the playbook for how movie products are promoted and distributed, Wal-Mart is assuming exclusive rights to sell toys and other gear for DreamWorks Animation SKG Inc.'s upcoming release "How to Train Your Dragon." See full story on DreamWorks deal.
Wal-Mart has been able to use its pricing power and consumers' perception that it's the low-price leader to launch price wars and help force other retailers to lower product prices. The company over the holidays sold hot book titles at a discounted price of $10, forcing rivals from Target Corp. /quotes/comstock/13*!tgt/quotes/nls/tgt (TGT 53.45, +0.08, +0.15%) to Amazon.com /quotes/comstock/15*!amzn/quotes/nls/amzn (AMZN 134.80, +0.07, +0.05%) to respond.
The timing of the 3-D introduction looks likely to catch many in the industry by surprise. Bob Perry, senior vice president of Panasonic Consumer Electronics, said in an interview earlier this month that it's unlikely that mass merchants such as Wal-Mart will carry the 3-D TV this year because of the education needed for the technology.
In seeking a first-mover advantage, Best Buy earlier this month began selling Panasonic's first 3-D TV home entertainment system bundle in the U.S., making it one of the few national retailers, including Sears Holdings Corp. /quotes/comstock/15*!shld/quotes/nls/shld (SHLD 108.50, -0.79, -0.72%) and Amazon that also carry some 3-D models. See related story on Best Buy's first-mover advantage in 3-D TV.
While analysts say it could be years before 3-D is widely adopted in part because of limited availability of content, it promises some reprieve for an industry that's been hurt by deflation in the price of TV sets. The average selling price for flat-panel televisions declined by more than one-third, to $660, last year from $1,000 in 2007, according to research firm NPD Group.
Andria Cheng is a MarketWatch reporter based in New York.
"With the advent of high-definition television, home viewers will see actors with extreme clarity and detail. Thus they will demand the stars of "Sex and the City" change their names to "The Golden Girls." -Conan O'Brien, In The Year 2000: Ted Danson Edition-