Wal-Mart cuts back on space for electronics

Customers are seen at a Wal-Mart market in Miami, Florida (REUTERS/Carlos Barria)

Wal-Mart Stores is cutting the size of its electronics department as popular gadgets shrink and making room to add back dropped items like fishing poles, fabric and full-figure fashions.

“It’s still a vibrant category but much smaller items are being sold,” Rosalind Brewer, president of Walmart East, said while speaking at the ISI Retail Summit on Tuesday.

Company officials said Wal-Mart will be selling the same number of products despite the reduction in the physical size of its electronics departments. They added that the size of the electronics departments will vary store by store.

Over the last couple of years, the world’s biggest retailer expanded space for entertainment items by about 20 percent to push the sale of flat-panel televisions. Now, hot items for viewing digital content range from smart phones to tablet computers like Apple Inc‘s iPad.

Janney Capital Markets analyst David Strasser estimated that Wal-Mart would be moving about 2,000 square feet per store away from the category, “suggesting the company would effectively be eliminating 7.2 million (square feet)” in its electronics departments overall.

Consumer electronics chains in general have been feeling the pinch from online competitors, a weak economy and declining demand for televisions. Big box retailer Best Buy Co Inc, a bellwether in consumer electronics, has been hurt by U.S. shoppers showing little interest in items like 3-D and Internet-based televisions.

Wal-Mart has been adding back thousands of items to its U.S. stores in a reversal of its 2008 decision to cut less popular products and deeply discount favored merchandise.

Brewer, who oversees 1,600 stores from Maine to Puerto Rico, said her division was also seeing higher-income shoppers return to Wal-Mart’s discount stores.

Wal-Mart’s sales at stores open at least a year have fallen for seven consecutive quarters in contrast with the growth seen during most of the recession when shoppers flocked to its stores for lower-priced goods.

As the economy started recovering, Wal-Mart saw some higher income shoppers turn to competitors like Target Corp.

Soaring gasoline prices could force some shoppers to look for ways to save money, which may benefit Wal-Mart.

To that end, Brewer said her division was seeing customers return to making stock-up trips as gas prices rise.

Wal-Mart shares closed up 1.3 percent at $53.52 on the New York Stock Exchange.

Copyright © 2011 Reuters

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