Consumer Electronics

Walmart Offers Consumer Electronic Discounts

Wal-Mart Stores Inc. (NYSE: WMT) has started to offer a series of large discounts on consumer electronics. The move gives it a chance to steal market share from Inc. (NASDAQ: AMZN) and Best Buy Co., Inc. (NYSE: BBY). It may also help the world’s largest retailer to break out of a pattern of flat same-store sales, which have made investors nervous.

The latest promotions at include TVs, laptops, tablets and cellphones. Among the most aggressive promotions are VIZIO SmartLED 55″ televisions priced at $698, home theaters priced as low as $278, T-Mobile talk and text plans offered at as little as $29.88 a month, and tablet PCs priced as low as $59,99. Virtually all of the deals are for brands from companies which have done poorly in terms of unit sales. For example, at least one of the tablets was made by Hewlett-Packard Co. (NYSE: HPQ)

The consumer electronics products are priced so low that it is almost certain they are meant to attract traditional Walmart customers — consumers whose low incomes give them little discretionary spending power.

Best Buy, the most likely brick-and-mortar target for Walmart, has had problems of its own. After a year in which investors believed the company had come back from revenue fall offs, it posted holiday season sales well below expectations. As a result, Best Buy shares are down more than 30% this year.

The ultimate target is, of course, Amazon. Consumer electronics are among the e-commerce company’s most important categories. Amazon has essentially re-invented the category by launching both e-readers and the Kindle Fire tablet. Amazon has also set a low price point for some of its products. The Kindle HDX 7″ tablet sells for as little as $229.  As is often the case with Amazon, it has used the Kindle to sell other products and services. Among these are Amazon Prime, which includes the company’s video streaming service. Recently, it extended that service with the new Amazon Fire TV set-top box.

Walmart, whose shares are down 1.8% this year, needs to improve its U.S. revenue to hold investor interest. To do so, it has to challenge Amazon effectively. With Amazon’s army of products and services, however, an effective challenge seems very unlikely.