Best Buy and Wal-Mart are positioning in an effort to capture the share of the consumer electronics market once owned by the now-closed Circuit City.
In a story in Knowledge at Emory, an online publication of Atlanta’s Emory University, academics discuss the two different strategies.
Best Buy, according to the story, is positioning itself as the provider of quality service and sales help “to consumers who are often baffled by high-tech merchandise. The company is focusing on more high-end products and new interactive features to differentiate itself from the big box atmosphere at Wal-Mart.”
On the other hand, Wal-Mart is positioning itself as the low-price option in consumer electronics.
Faculty from University of Pennsylvania’s The Wharton School, along with industry analysts quoted in the article, say that instead of fighting to the death, both stores can co-exist if they follow clearly defined strategies focusing on service and price.
Wharton marketing professor John Zhang predicts that Best Buy is likely to gain the biggest share of sales from the demise of Circuit City.
And David Reibstein, another Wharton marketing professor, says some customers may have the product knowledge to feel comfortable buying electronics at Wal-Mart. But for those who do not buy new electronics frequently, the purchase is viewed as expensive and risky, he says. “. . .for those people, it turns out that Best Buy is the only real option.”
On the Wal-Mart side of the issue, Zhang says, “Given that most of the technology is more or less standardized, people will look for price,” In which case, Wal-Mart wins.
To compete against Wal-Mart, he advises Best Buy to provide a different product mix than Wal-Mart.
Another Wharton professor, Peter Fader, says all retailers in the consumer electronics space should concentrate on their strengths and ignore the competition. Best Buy, he says, should avoid the temptation to cut prices at the expense of quality sales and service, and Wal-Mart should be wary of adding sales people who are not fully able to compete with those at Best Buy.
Advice to take away from this: Concentrate on your strengths.