Last week a Wal-Mart Stores Inc. executive said the retail behemoth is
interested in adding an installation and service element to its fast-growing electronics segment. How would the company accomplish this? "We are looking at different options," was all that Gary Severson, a Wal-Mart SVP, told MarketWatch on that point.
Still, it's an intriguing strategic question, worthy of a little speculation.
Wal-Mart's competitive goal is to come up with an answer to the chief differentiator enjoyed by rival Best Buy Co., which, as we've reported, began emphasizing service years ago. A key event in Best Buy's evolution was its
2002 acquisition of Minneapolis-based Geek Squad, then a local computer service provider with a catchy brand and now a national service operation handling installation and service of HD televisions, computers and other products.
Since Wal-Mart is playing catch-up, building such a capability might take too long -- especially since this has been a company relentlessly focused on price, not service.
Partnering, in one form or another, could make sense. A little Web-surfing indicates electronics installation is a local business, with outfits like
Zip Installation signing up small businesses around the country as part of a nationally branded network. Wal-Mart could presumably try to build its own such network. Home Depot Inc. does something like this with contractors, connecting customers with independent businesses who install kitchen and bath fixtures, flooring and the like. Alternatively, perhaps Wal-Mart could buy Zip or a rival and try to convert all those relationships.
What else could Wal-Mart buy? A
different kind of organization is NEW Customer Service Cos., a privately held, independent third-party administrator of service plans and product support programs. I've no idea if NEW would be attractive to Wal-Mart or interested in selling. It is interesting to note that NEW
announced in March it is building up its own custom installation program.
Wal-Mart would be making its move into services at a time of consolidation in the custom-installation industry. The field boomed along with housing, according to electronics industry publication Twice. But with the housing bust, the double-digit growth the installers enjoyed has
leveled off. That's a situation that could work to the advantage of Wal-Mart. If it's gaining share in a slower market, installers might be more willing to accept the emphasis on efficiency and price that it would no doubt bring to this realm as it does to every other.
Could Wal-Mart hope to equal Best Buy in service through any of these routes? It seems doubtful. On the other hand, it may not need to; given its other strengths, just getting on the board in service could ratchet up the pressure on Best Buy. -
Kenneth Klee
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