Best Buy (BBY) and Wal-Mart Stores (WMT) are shaping up to be the big guns this holiday shopping season. I'm more convinced of that after witnessing last weeks Black Friday bonanza between the two retailing behemoths. Although Best Buy had the more enticing gadget deals for the largest retail shopping day of the year, Wal-Mart matched and even beat some of those prices in the "hot product" category like laptop PCs and gaming consoles.Since more customers will be spending holiday dollars in December this year compared to last, the holiday shopping season is in its prime right now. Wal-Mart is really taking the gloves off by offering huge discounts on hot video games (which beat up the stock prices of the competition this week) and also by announcing it would replicate some of the services Best Buy offers -- like installing and configuration assistance for products like flat-panel TVs and computers. What -- Wal-Mart is getting into the service game? You bet.
This is not Wal-Mart's area of expertise. Best Buy's Geek Squad will be hard to compete with for the world's largest retailer right out of the gate, but don't expect Wal-Mart's offered services to be subpar. Since gadget prices and flat-panel TV and computer margins can be razor-thin, there is an opportunity for Wal-Mart to pump up its consumer product services margin here more than introduce new competition to Best Buy.
Devices are becoming so complex that service organizations to hook all this stuff up and wrap consumers in a digital lifestyle will flourish for the next five years. Gone are the days of just picking up a 47" LCD TV at Wal-Mart and going home to hook it up yourself to that high-definition Blu-ray player, DVR box and multiple high-definition video game systems.
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