Wal-Mart's HDTV pricing puts competition in a world of hurt
By Darren Murph 
posted May 7th 2007 12:12PM
posted May 7th 2007 12:12PM
Let's face it, consumers eying an HDTV are looking at the pricetag just as often, if not more often, than the picture quality, contrast ratio, or number of HDMI inputs. Companies like Vizio who have entered this cutthroat market and excelled have done so on price, and no one knows price better than Wal-Mart. The mega-corp has been adamant about undercutting big box retailers, and while you aren't likely to walk into a Wally World electronics section and find the clean, uncluttered, and well-stocked shelves that a next door neighbor may have, you're likely to stomach the environment for a few minutes in order to save a few Benjamins. An MSNBC writeup took a look at how Wal-Mart's industry-leading price scheme is potentially hurting the other guys, and it even goes so far as to suggest that the recent store closings and layoffs at Circuit City, Tweeter, CompUSA, and Rex Stores were all triggered by the giant slashing prices to acquire razor-thin margins. Of course, it's no secret that HDTV prices in general have been sinking like a stone over the past half year or so, and while the boutiques are banking on customers finally coughing up the extra dough for "knowledge staff" and better all-around service, we're betting that price still remains king in the land of HDTV.[Via BloggingStocks]
Wally has been shutting down stores for years, but it is not just Wally doing the damage. Ebay retailers undercut Wal-Mart by quite a bit. Price is all relative. Before HDTV spending $1000 for a TV was outrageous. Quality is still important, and that's where stores like Best Buy can compete with Wally World because Wallys' stuff is never top notch. There will always be quality market, and with the internet warehousing many middleman are being hosed which is good for us consumers.
This is true. I absolutely hate Wal-Mart, they are seriously killing competition. Small businesses are almost non-existent these days because of Wal-Mart. I personally do my very best to support small businesses even if I pay $20-50 more for an HDTV. I receive service from small businesses that I NEVER get from Wal-Mart (Costco, Sam's Club, etc.).
However, it's not totally Wal-Mart's fault. It's also the fault of the electronics companies that allow Wal-Mart to sell at such low prices. Before Wal-Mart was such an influence, electronics companies use to set ceilings of how low advertised prices could be for products. Now it's a free for all and they don't care, they just like to see the profits roll in. Oh well, it's the new golablized world we live in :).
WalMart creates competition - it doesn't kill it. Every store selling the same products for the same prices is not competition.
Ok, did this article talk about small businesses, AT ALL!?!?!?!?!?
You are seriously an IDIOT if you think that, as AMERICANS, we should volountarily fork out the dough just so that businesses like Circuit City, The Good Guys, and Best Buy can stay in business.
This article spelled out EXACTLY how the smaller businesses stay in this particular business.... BY HIKING UP THE RETAIL PRICE TO RIP OFF THE CUSTOMER!!!!!!!!
Look closer into how you defend these other businesses before you bash Wal-Mart. You are actually DEFENDING high prices! How does selling everything at a high price help the economy as a whole. People buy less when they can't afford things. Wal-Mart allows people to buy things when other stores are ripping them off, EVEN WHEN THEY ARE IN DIRE NEED!!! Not just for big screen TV's.
Just cause you make $100,000 a year and don't need to go to Wal-Mart to shop, don't kick all the middle to low income Americans to the curb.
The problem is the AMOUNT of the premium the boutiques want.
If I'm spending 2000 on a new plasma, and spend some time with some staff showing me about them; it's not worth it to me to go deal with the rude inconsiderate people at walmart where the TV can be had for 1900. Not to mention if I should have a problem, I know who I'd rather be dealing with...
However, the boutiques' problem is that their 2000 dollar TV is being sold for 1200 at walmart. For a couple of days pay (800 bucks), it's definitely worth my time and effort to make a deal with the devil (as it were).
Okay, this argument is getting really old! Why does everyone bash Walmart for killing small business? The whole point in starting business' is to make money, correct? Well, then give old Mr. Walmart the credit he deserves. He started as just a little corner store and turned it into the largest money making chain in the world.... AND he's American! Even better! But, now that he has succeeded where most others have failed, because he figured out what he had to do to make it work, he is hated by everyone for being a killer of small business. How hypocritical is that? You think I'm alone in my thinking? Tell that to the people who spend nearly 500 Million in Wal-Mart stores the day after this past Thanksgiving. Or maybe turn around and tell it to the single mother of three in the next cubicle that was able to by buy new clothes for her entire family for a couple hundred bucks by going to Wal-Mart, rather than going to Macy's and only being able to buy a couple shirts.... or for that matter, even Target and only being able to get half as many items of clothing. I bet she has no problem with the effects Wal-Mart has on small business because there isn't a small business out there that is only going to charge her $8 for shirts, etc. for her kids. Wal-mart was just smart enough to figure out the only way it was going to work was by charging lower prices, and in the long run it would pay off. Well, it did... he made a business plan and stuck to it. Maybe if more small business' would go that route rather than playing the mark up game they would be successful as well.
rant ended....
Ryan, you need to open your eyes. Sure, you can credit Wal-Mart for operating a successful business model. However, you can also credit them with moving many of our manufacturing jobs overseas. When Wal-Mart meets with a company to sell their product one of the first things they check for is to see if they are manufacturing overseas so that they can bring down the price. It's not just about the corner store down the street anymore. Who benefits the most from Wal-Marts prices? Near the top of the list is people that have factory manufacturing jobs. I am not against global trade, but it should not be at the expense of our country living without a job, only to be unaccounted for in the unemployment statistics 6-months later.
I am one of those corner custom electronics integration boutiques. Wal-Mart and COSTCO often sell for less than what we can buy from our distributors. It's not our fault.
Most of the displays found at those warehouse stores we wouldn't sell anyway. Many have poor pictures and they cannot be reliably with high-end RF remote controls. We use RTI and prefer to control via RS-232 ports on the back. Anyway, our business model is to provide GREAT system design, installation and service. Try finding any of those at Wal-Mart.
Please don't credit "Mr WalMart", his name is Sam Walton by the way, for the Wal Mart that you see today. Sam Walton is not with us anymore and I'm sure he would roll over in his grave if he saw how Wal Mart is being run today. Wal Mart is now run by one of his sons who don't not carry on the legacy of his father.
Speaking of Wal Mart, my brother just bought a 42" LCD for about $600 yesterday.
@Ryan: You're perfectly right. Places like Circuit City are not going out of business because they can't compete with WalMart's prices... if that were the argument, then Best Buy would be closing up shop, too. Stop blaming WalMart's ingenious strategy with the downfall of America. Let's start blaming people for driving Honda's and Toyota's, too (or wait, let me guess, buying Toyota is somehow American, because they have a few factories in the U.S.?). Costco sells nearly everything at a 13% markup from wholesale... given the prices at Sams Club, it would appear they do about the same.
@Joe: You better believe WalMart has a successful business model. Moving jobs overseas? Well, I'm pretty sure you can credit a large chunk of American companies for doing this, no? Toyota has forced the "Big Three" to start producing more overseas. Banks and other companies (Dell? haha) have their Servicing overseas (ie, India). Everyone is starting to realize that the only way to make money is to abuse the Law of Arbitrage that only exists in a non-perfect economy. "...GREAT system design, installation and service..." doesn't matter to the majority. If you can brand your product and still offer a competitive pricing, that's a different story. You certainly can't substitute service for price. WalMart realized that a long time ago.
I don't feel bad at all for the Radio Shacks and Circuit City's and MediaPlays that are closing their stores because more efficient companies are taking over. They've had just as long in the marketplace as WalMart has. WalMart has done the right thing, and they're profiting off it.
Very few people, on HDTV purchases, go out and buy one "on a whim". They research, shop around, and get what they need for the best price they can get it. Let's face it, die-hard WalMart shoppers aren't going to buy an HDTV, that's why they shop at WalMart in the first place. But if you have a middle-income family that decides to buy a non-Panasonic or non-Sony HDTV because they intelligently realize that the increase in picture quality is not worth the ridiculous increase in price, and find the best price at WalMart... how is that unfair?
It's too bad that Americans are so quick to point the finger at a successful American company, but will run to buy a Honda/Toyota/Nissan, etc. These people's concepts of an open economy are ass-backwards, and the reason the U.S. economy is suffering.
And yes, all you anti-WalMart fanatics can try ripping my post apart, but Rick is right. When WalMart posts continuous record-revenues and profits, you have yourself to thank, just as much as you have yourselves to thank for record Toyota/Honda revenues and profits. Take responsibility for your actions.
Joe, you are wrong. It's not Walmart's fault. It's the government that allows moving manufacturing overseas. You can't blame Walmart for finding a cheaper way. This is what's it all about in capitalism. Don't complain about Walmart, complain about the government. Instead of taxing extra products and services brought in from overseas they stay silent and this is the result. Nobody prevents you from importing TVs and electronics from China, now does it? Again, it's capitalism man.
For me personally, Walmart is doing a great service to everyone. Boost competition, gives more jobs and convenience to an average Joe.
If government said ok, whoever imports products and uses overseas workforce instead of local workforce they MUST be taxed more. It is simply impossible to compete in the US market where you pay at least $6 an hour and some 3rd world country or China where they pay workers $6 a month.
But back on topic. Joe I understand your frustration, but Walmart is not to blame, they are just leveraging the opportunity that's all.
Why is this even an issue with HDTVs? Have you seen Walmarts HD offerings? The margins are low because the products are crap.
Walmart is only a "good deal" if you dont mind a "Sorny" or "Magnetbox"
The other stores can still compete by offering reasonable prices and selection.
I am not a fan of WalMart but I hardly think shopping there is worse than shopping at BestBuy or CircuitCity. If I went to Walmart at least I am not paying for "customer service" which is completely useless at BestBuy and CircuitCity. The employees there might be somewhat helpful but are usually misinformed, usually clueless, and try to get people to buy $80 HDMI cables. Or tell people (i.e. me) things like "Only BluRay is backwards compatible with DVD" or "You need to get 1080p if you want the best picture". Why go to a boutique if you want a $1000 panel and not a $3000 one?
And I want to add: a lot of people complain about "value" HDTVs but I don't see the argument. I can get a $1200 42" LCD (say Vizio from above) or a $2500 Sony/Samsung/etc...
So waht if the picture is slightly lower quality on the Vizio? HDTV from cable/satellite is hardly top quality and won't be for several years. Compression, decoding problems at local and national levels, signal dropouts, etc. all keep one from having a pristine viewing experience. BluRay and HD DVD both have numerous software (disc) problems and can't even keep consistently superior codec mastering. Save a bundle of cash and still be happy that your panel isn't the weakest link in the chain.
Many many more buyers are becoming quite knowledgeable about HDTV's. If you're going to spend in excess of a grand or more for a 42"+ flat panel a little easy research (magazine reviews or on-line forums) will take you only a few hours. My next TV will be a 58" 1080p Panasonic and I'll buy it at Wal-mart or CC or Costco or Walgreens. I know exactly what I want so it's strictly a matter of price.
Joe: "I am one of those corner custom electronics integration boutiques. Wal-Mart and COSTCO often sell for less than what we can buy from our distributors. It's not our fault.
Most of the displays found at those warehouse stores we wouldn't sell anyway."
Why would you even be trying to buy products you find below the quality you are willing to sell? Sounds like a catch-22 statement. Not defending anyone, but if I want a buy a low end plasma or LCD that 'I can afford' and you have nothing I can afford then neither of us lose. And here I always thought boutique shops catered to people with more money than sense. Maybe they have a little more sense these days.
GhostDoggy: I have multiple distributors, and some of the products that they offer overlap with value chains. But that doesn't mean that I like to specify for those products to be used on my projects. Sometimes I am forced to pick items that I know are not as good. I understand value, and I rarely suggest anything that I wouldn't buy with my own money.
I don't expect the general population to use a technology integrator to select their home theater components. But that's fine, because I also don't expect the general population to drive a Cadillac.
..I would also like to add this: Just because a business is producing profits, that doesn't mean that their business model is benefiting America. I wasn't trying to imply that Wal-Mart is the only monster in our country.
I recently took a position in the Electronics department of a local Wallyworld. For me, it's a semi-retirement job. The department is large, quite busy (the store does over $110 mil annually), and well staffed. We still have more product than we have shelf space for. Every attempt is made to keep the shelves well stocked, neat and clean. Nearly everyone in the department is over 50 and we are well attuned to the needs of the customer and go to every extent to attend to those needs. Yes, this is only one store among many - especially in the Atlanta, GA area.
Those at the store level have no control over what's on display or the prices charged. All that is decided at a corporate level. I don't want to sound like a commerical, but do check out their website and see what is available there - even more opportunity to price shop.
This is my second foray into the retail world, the first being a couple of years in a Home Depot. Prior to that was thirty years of work in various social service positons. WW is much more customer friendly than some of us remember from the old days.
@ Alex
I hear you regarding Best Buy, a.k.a. the worst electronics store in creation. I had a rep tell me the other day, with a stern, straight face, that Blu-ray is the ONLY format on the market capable of producing 1080p visuals. This was AFTER I asked a question about a particular LCD's ability to fully resolve 1080p compared with another brand USING MY 1080p HD DVD PLAYER.
I was seconds away from getting an HD DVD title, with "1080p" clearly written on the back, to prove his ignorance, but I digress. Perhaps Wal-Mart is winning because stores like Worst Buy and Short-Circuit City are full of misinformed, underpaid, brainwashed-by-a-particular-camp clowns trying to steer customers to purchases that serve the store's needs instead of the consumer's.
And I'm not trying to start anything, but if Wal-Mart ends up backing HD DVD with super-low-priced players from China, rival HDTV manufacturers and outlets will have more friends to join them as they cry foul and bleed money.
Re:mcrexx. Everybody touts small business but do you go to a tailor instead of buying off the rack? Do you buy factory made instead of handmade? Do you only buy meat at your independant butcher shop? Do you make your own dog food or do you buy it ready made? Do small business's buy from big suppliers or small independants?
And why are you an advocate of price fixing? Whose interests do you have in mind? I don't think it's mine.
Also, with all the bashing going on about big business, Most people I know don't want to work for a small family owned business that might close up when the founder dies, decides to retire, passes it on to inept family members to run into the ground, etc. I think there are many other reasons a small business might close up. Lawsuits, complicated regulations, faulty business plans might be some.
Actually i do not know why anyone putss down wal mart either. most people are hapy to get things cheaper.thats the idea of competition. if other stores go out of business it is not walmarts fault its the small business for not offering cost effective ways t ostay in business. going into business has risks,people go into business for profit not because they care about you. if those same businesses are failing than its because they are not adjusting to wants of peole,plain and simple. i do not care who owns busineess i will go to what gives me most value for money,those who do not are not supporting competiotion and will always overpay.
what should walmart do raise prices? that what mafia does,fixes prices higher so noone can go buy where its cheaper. as for americans lossing jobs? find a new job,peole in low level retail generally are temparary anyway and no one should have t o pay high prices to ive people jobs,if they are than our economy in worst shape than i suspected.
I think that everyone has made some interesting points; however; I think that I need to get this discussion back on track. The original topic was: "Wal-Mart's HDTV pricing puts competition in a world of hurt".
I have so much that I could say here but I'm going to hold back my opinion as much as I can and stick to the facts. Who is Wal-marts competition when it comes to the HDTV market? The Wal-mart in my city does not even sell a 1080P HDTV yet...and how long have 1080P televisions been on the market now? I believe that the price is what will determine what the majority of consumers will spend their money on...this is common sense economical behavior. If Wal-mart would have sold my Sony KDSXBR2 60" HDTV for less than what I paid at Circuit City, then I would have purchased at Wal-mart instead of Circuit City (may be this is a bad example because Wal-mart will never sell my Sony KDSXBR2 60" HDTV but you know what I mean).
The real issue here is what is going to happen to the HDTV market when Full HD 1080P Televisions and HD DVD/Blu Ray players (besides PS3) hit the shelves at Wal-mart. The minority that will be hurt is the companies that have been ripping off consumers with buzz words like "HDMI 1.0, 1.1, 1.2, 1.3...etc". The HDTV market has been over priced for years because companies involved have been able to keep prices up and off of the shelves of stores like Wal-mart. Well, now the middle class and lower class (majority of consumers) will finally be able to afford a new HDTV and any companies that are producing generic goods are going to make a fortune in this industry. In the end consumers win because prices are finally going to fall and the HDTV industry is going to start selling the next over priced technology that I won't be able to buy for a few years.
The other HUGE issue here is that Wal-mart may be the ones who are able to end the format war (HD DVD vs. Blu Ray). If I was Sony or any of the investors of Blu Ray that I would be extremely worried if HD DVD players hit the shelves at Wal-mart and sold for hundreds less than Blu Ray players and HD DVD's cheaper than Blu Ray movies. It costs less to make HD DVD's then it does Blu Ray movies and everyone knows this, so I'm interested to see what happens if Wal-mart sells HD DVD players for less. The prices for Blu Ray players will have to fall but if HD DVD is able to sell their players and movies for less and still make profits, then say good bye to Blu Ray. Sony better sell more of those PS3's (and releases another game or two...) before the HD DVD players hit the shelves at Wal-mart because that will be the only thing that will save the Blu Ray! My prediction: HD DVD (only because it is cheaper to make HD DVD's then it is for Blu Ray discs). This is why HD DVD is dragging their feet right now...as soon as the cheap HD DVD players hit the shelves at Wal-mart, then you will see a major release of all of the HD DVD titles that will only be released in HD DVD and/or the price for HD DVD can and will easily undercut the prices for Blu Ray discs which will virtually blow away the competition.
This is coming from someone that has invested most of his money into Blu Ray and I really want Blu Ray to win the war! Sony's only hope will be to get their players on the shelves at Wal-mart for the same price as HD DVD players, keep pushing hard to release as many new Blu Ray movie releases with prices similar to HD DVD, and keep developing new technology and ways to cut production costs with the Blu Ray discs.
My whole point is that money talks and people walk and this is what drives a free market society. This whole discussion was basically pointless because Wal-mart is not doing anything against the law or they would be shut down by the government (which is you and me). You and I are the ones who are spending millions of dollars a day at Wal-Mart. "Always low price. Always." We should all be learning from Wal-mart because they have demonstrated the ultimate business practices that will put businesses over the top. Wal-mart is not the enemy here...it is those companies that want to control supply and manipulate the demand...so that consumers are forced to pay more...and the technology is slowly released YEARS after it has been developed so that producers can maximize their profits. You will soon start hearing about the next new amazing technology that you've gotta have and that you can't buy it at Wal-mart stores until a few years after its release.
Thanks for listening to what I had to say and for the discussions in here...and please share your opinions because every opinion matters! We may not all agree but we can still talk about things and this will help to expand and define our beliefs. Darrold
I have seen the effects Wal-Mart has on small business. In my area alone there are 5 of their stores within 40 miles of each other (in terms of eliminating competition, they end up competing with themselves when they take over a market so quickly). The invasion of Wal-Mart in my area has turned this once nice D.C. suburb into an economically depressed area needing a variety in business. Enough of my complaints about how they economically effect areas, now on to the meat and potatoes of how they get their prices so low.......
Wal-Mart's electronics are not top-shelf or quality by any means, and often they purchase older stock to get such low prices. I've sold HDTVs and have seen this first hand. They'll have a 2 year old tv for a $150 less than the identical newer version (which usually has better features and capabilities) and my customer wants to know the bottom line of why our prices aren't as low as Wal-Mart's. The purchasing of older stock and selling it at prices largely above their real value is how Wal-Mart makes record profits and eliminates the competition.
Its rediculous the amount of cheap shit they sell posing as top of the line electronics.
Pathetic.