December 15, 2004 4:00 AM PST

Wal-Mart eyes green with branded gadgets

Wal-Mart Stores, eyeing potentially huge profits in electronics, is hoping that customers who come in for a 12-pack of tube socks will leave with a tubeless TV as well.

The retailer--which has sold traditional consumer electronics including stereos, PCs and cathode ray tube (CRT) TVs for years--has begun a new effort to sell sought-after trendy gear such as digital music players and high-end TVs. It's launched a new house consumer electronics brand, dubbed iLo, and is dedicating more floor space to electronics.

"Wal-Mart is having trouble generating solid year-over-year growth numbers," said Steve Baker, an analyst with The NPD Group. "One of the ways they can start generating a lot of growth is to expand into categories where they haven't been, especially in high (dollar) value products. Flat-panel TVs is one."

News.context

What's new:
Wal-Mart is seeking to expand its reach to trendy electronics items such as flat-panel TVs and DVD recorders.

Bottom line:
The retailer's efforts to expand consumer electronics sales could be limited by the customers it serves and its reputation as a low-price merchandiser. But lower prices may make Wal-Mart competitive in the lucrative electronics market.

More stories on consumer electronics sales

Wal-Mart isn't the only big name to launch its own electronics brand or pay more attention the lucrative space in recent months. Best Buy launched Insignia, a house brand for televisions, PCs and devices such as portable DVD players this fall. PC makers Dell, Gateway and Hewlett-Packard have also all mounted efforts to tap the consumer electronics market this holiday season with their own flat-screen televisions and music players.

Although Wal-Mart isn't attempting to replace the brand-name products it already carries, it is positioning iLo as a lower-priced alternative. It's also willing to offer some types of electronics, such as DVD recorders, that companies such as Dell haven't been interested in.

Wal-Mart enjoys a fairly unique position as an electronics supplier. It caters to a broad audience of consumers with more than 3,000 stores in the United States and maintains tight relationships with Asian electronics manufacturers, which it can use to turn out its iLo gear.

But Wal-Mart, which carries well-known consumer electronics brands including Panasonic, Sanyo and Sony, aims to use iLo to plug gaps in product availability or pricing in its selection, said Karen Burke, a Wal-Mart spokeswoman.

Filling in the spaces with reasonably priced gear could be a boon for the retailer, Baker said, as more consumers seek to acquire the latest gear and Wal-Mart, in many cases, can make it more affordable.

Despite its fledgling effort, the retailer got off to a slow start this holiday shopping season, a development analysts blame on the retailer's lack of aggressive pricing. The misstep amplifies the need for attention-grabbing gear, they said.

Wal-Mart's first iLo-branded product, a 42-inch plasma-screen television, went on sale in about 1,300 stores in May. With a price tag of less than $2,000, it is up to $1,000 less expensive than similar-size, enhanced-definition plasma-screen sets from names such as Panasonic, Samsung and Zenith sold by other retailers.

Similarly, Wal-Mart's iLo DVD recorder DVDRO4 sells for about $150, meaning it costs between about $50 and $100 less than similar player offered by other brands. Another DVD recorder, DVDRHO4, which comes with an 80GB hard drive, costs about $280, about $90 less than a similar Toshiba model found on Wal-Mart's Web site. For its part, the iLo music player, with 256MB of memory and FM radio tuner, sells for about $80, around $30 to $60 less than other like devices.

Got it at Wal-Mart
But Wal-Mart's efforts to expand its consumer electronics sales could be limited by the customers it serves and its reputation as a low-price merchandiser.

Compared with customers of electronics-specialist Best Buy, for example, Wal-Mart customers tend to have less buying power, demographic data shows.

Demographics from The NPD Group show that 52.5 percent of Wal-Mart's electronics customers had household incomes of less than

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21 comments

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uhm 47.5 > 44.4
Don't you just love it when people bad at math use it to make a point?
Posted by (1 comment )
Reply Link Flag
Agreed! Checking Facts + Good Math = Good Article
For those of you who missed it: 52.5 + 47.5 = 100 percent. If 52.5 percent have less than $44,999, then 47.5 percent have greater than or equal to $45,000. That's the Walmart crowd. The BestBuy crowd has even fewer percent earning that much. How on earth does that mean that Walmart customers are poorer? Mr. Spooner, if you can't even get that right, how can I expect you to get the rest of the article right?
Posted by lsc (4 comments )
Link Flag
Save money but not time...
With 20 cash register terminals in most Wal-mart stores, only 4-5 are actually open but with average of 10-15 in line. And its not even Christmas week!

And what is with the "pathetic" SelfCheckout stations? "Return item from bag" "Please scan item again" "Item not found" "Thankyou" "Please insert card" "Please Try Again" And they have to use ONE employee to watch the four checkouts and each is having a problem. Hmmm 4/1=1 Not 4 sales. I watched 6 people leave their items and walk out. After all, I waited 25 mintues in line to buy Wal-mart junk!

25 minutes plus time to/from car. That is 30 minuites. Half of an hour. $40 of my current rate. And for what? $10 in savings?

Time for EVERYONE to write manufacturers of goods sold at WalMart and complain how you refused to purchase their goods because WalMart wants to make you wait to spend your money.
Posted by Below Meigh (249 comments )
Reply Link Flag
That is the least of it
So you don't like waiting in line, but you don't mind that they underpay and treat their employees badly, that they use predatory pricing to shut down the local mom and pop stores, etc?

I see the christmas spirit is alive and well.

Just say no to evil corporations.
Posted by (242 comments )
Link Flag
Wal-Mart iLo... Name Brand Quality?
Usually when shopping for electronics, we all consider buying the brands we have never heard of because we could save a hundred bucks. But most of us end up forking over the money for the brand name. Why? Because we believe that the product will be more reliable, last longer, and have more quality results when used.

Well... this thinking has proven to be true in many instances with other unknown names. But Wal-Mart is quite a name and if their customers link iLo to Wal-Mart, they may expect Wal-Mart's Good quality for a low price.

Will iLo deliver? Will their MP3 player be good quality for a low price? It could just become the new thing.


Wal-Mart Expanding Electronics...

<a class="jive-link-external" href="http://allwaysmusic.modblog.com/" target="_newWindow">http://allwaysmusic.modblog.com/</a>
Posted by (59 comments )
Reply Link Flag
You're right
iLo could become the next Panasonic, or possibly it could be the biggest flop in consumer electronic history. If you think about it the name iLo is pronounced "I Low", and they're real cheap...that's interesting....
Posted by PCCRomeo (432 comments )
Link Flag
iLo to Wal-Mart
<a class="jive-link-external" href="http://www.analogstereo.com/cheap_car_insurance.htm" target="_newWindow">http://www.analogstereo.com/cheap_car_insurance.htm</a>
Posted by George Cole (314 comments )
Link Flag
Discount unemployment coupons
The people that shop Wal-Mart in my neighborhood are the ones losing their jobs to China; they are financing their own unemployment.
Posted by gthurman (67 comments )
Reply Link Flag
WALMART AND ILO TELEVISIONS
IN FEB OF 2007 I PURCHASED A 32 INCH ILO TV JUST TO HAVE IT BREAK DOWN FOR THE PAST 5 MONTHS I HAVE CALLED ILO AND YET TO RECEIVE A CALL BACK ILO TV DOES NOT CARE ABOUT PEOPLE JUST THE MONEY THIER WARRANTY ARE JUST AS MUCH JUNK AS THIER TVS I HAD RESPECT FOR WALMART BUT NOW MY TRUST IN THEM IS VERY LITTLE I AM NOT THE FIRST TO BUY THIS JUNK ILO TV AND FEAR I WILL NOT BE YHE LAST ILO TVS SUCH BE PULLED FORM EVERY WALMART SHELF BEFORE MORE PEOPLE GET RIPPED OFF THIS ILO TVS WERE MASS PRODUCED ONLY FOR PROFIT WITHOUT CARE FOR THE CONSUMER WHO WORKS TO BETTER THEM SELVES AND NEVER AGAIN WILL I EVER PURCHASE AN ILO PRODUCT MY 32 INCH ILO AND ITS COMPANY HAVE TAUGHT ME WELL BEWARE OF (ilo brands)THEY ARE THE GREAT AMERICAN RIP OFF
Posted by eperkins65 (1 comment )
Reply Link Flag
26" ILO
I've have my set for about two years and love the picture. However, the controls tend to lock up and the only thing that works is the power button to turn it off. I can then turn it back on and it works fine. A co-worker has the same TV and yes, the same problem. Ilo definately has a quality problem. At least I can watch mine. Good luck with yours.
Posted by leonsls (3 comments )
Link Flag
WALMART AND ILO TELEVISIONS
I also purchased a piece of junk called ILO along with a two year warranty from the great American Chinese broker of products. I have been waiting 5 months for assistance and from the way I was treated after the sale at Wal Mart ,I really don't expect any. Future TV buyers should take this story as a warning on where to do there tv shopping.
Posted by rippedoffbywm (1 comment )
Link Flag
Need a phone number
I bought a ilo tv from wal-mart and the remote control do not work who do i talk too.
Posted by gloria j (1 comment )
Reply Link Flag
 

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