Retailers On New Price Wars
Regardless of philosophy or business model, every consumer electronics retailer, from the nationals to the independent dealer, is in an all-out price war. While some retailers say current pricing and margin pressure is nothing new, others say they've never seen anything like it. The trick now, they all agree, is to become engaged without getting killed.
The fact is the CE industry constellation now revolves around Walmart and Best Buy. They compete head-to-head in CE, constantly making extremely price-centric pitches to the cash-strapped consumer. "The biggest question for 2009 is 'How do we react to this new environment where we have two retailers with 30, 40, 50 percent of the dollars?'" asked Stephen Baker, vice president of industry analysis at NPD Group.
Walmart has upped its bid for electronics sales with its Project Impact Stores (see sidebar), and last month began offering CE installation services with N.E.W. Corp. Meanwhile, Best Buy is maneuvering to meet Walmart head on, with price, service, and financing ("No-interest payments on all home theater, HDTVs and Geek Squad Purchases totaling $999 and up if paid in full within three years"). The moves not only put pressure on product pricing, but they squeeze service pricing.