Discount Chains Make Inroads with DTV

Once the rarefied domain of specialty electronics retailers, home theater is going discount. Big-box discount chains like K-Mart, Wal-Mart, Inc. and Target Stores have seen their revenues surge since adding digital televisions and related products to their inventories.

The discounters were late coming to the home theater market, but have gotten into it in a big way this past year with plasma displays, HDTVs, DVD players, surround-sound receivers and other goodies previously available only at high-end stores. Wal-Mart, which features electronics from Panasonic and Sony, made its tentative foray into the widescreen TV market only this past summer. The niche has been so successful that it will soon be featured in all the company's locations. Target has increased its electronics offerings by about 20% in the past four years.

The addition of upscale electronics at down market discounts has contributed significantly to Wal-Mart's and Target's bottom lines. Bentonville, Arkansas-based Wal-Mart posted an 11.8% increase in sales for its third fiscal quarter, with comparable store sales up 4.2%. Sales total for the quarter was $37.6 billion, a substantial increase from the $33.6 billion reported for the same period last year. Minneapolis-based Target Stores also noted an 11.8% increase, with sales of $8.5 billion, compared with $7.6 billion for the same period in 2001. The numbers are especially impressive given the general softness of the US economy.

Unlike specialty retailers, big-box discounters don't offer delivery and setup services, and aren't about to get into the custom installation business. Consumers apparently aren't daunted by the complexities of new products, or if they are, are willing to take their chances to save some money. Those who are daunted, or who need installation or financing for new equipment, can find those services with specialists, who "are offering extended payment plans that take you out into 2004," according to retail analyst Marie Driscoll of Argus Research. "That's one of the ways they generate business. Wal-Mart doesn't do that."

The discount trend will continue, according to a recent in-depth analysis by Constance Hayes of the New York Times."The more these products become a part of your everyday life, the more Wal-Mart will sell them," Driscoll said.