Wal-Mart expands electronics segment

In the quest to raise higher-margin revenue, Wal-Mart Stores Inc. (NYSE: WMT) underwent sweeping changes in some of its stores last year, as the retailer wanted to lure higher-income shoppers. Additionally, the retailer wanted to court more sales from existing shoppers, so it started outfitting stores with goods that seemed more demographically compatible with the areas it served. While this effort is still underway (no changes in my areas at all, yet), Wal-Mart stores are not seeing collective sales boosting and margin-padding effects so far. If they do, those effects are hiding somewhere.

The world's largest retailer will probably continue playing with the size and offerings available within many intra-store departments. The lucrative (and good margin) home electronics business is one area where Wal-Mart intends to compete more heavily in the near future. Why let Best Buy have all the fun (and profit), right? Wal-Mart shareholders are probably looking towards something -- anything -- to boost Wal-Mart past where it is now and take the share price along with it.

Wal-Mart officially announced it will begin selling a larger array of electronics items, including new Philips and Sony home theater systems and more HDTV sets. This comes after some remodeling of the electronics areas within Wal-Mart stores (mostly Supercenters) in 2006. The question is this: will customers actively seek out Wal-Mart for higher-end electronics purchases? My guess is that Wal-Mart's ability to lure shoppers from Best Buy, Circuit City, Tweeter and other consumer electronics shops will come down to one criteria -- price. That is probably not the criteria Wal-Mart wants to sell on, but that is what it will be.