Today’s review will cover an “interesting” article from Businessweek on the so-called Wal-Mart Effect. The author’s journalistic skill will be shamelessly torn down and mocked. Enjoy.
Essentially, he says that Wal-Mart’s pricing on a single flat-panel TV in the Christmas season has fundamentally and permanently changed the landscape of the electronics market as a whole. A no-name TV, specifically a 42″ Viore, was priced at $988. A similar Panasonic was priced at $1294. Other retailers couldn’t match these prices – or didn’t want to – as their prices had been nearly double that for some time.
Cleary, this was an evil act. I mean, come on, retailers are going out of business.
The fallout is evident: After closing 70 stores in February, Circuit City Stores on Mar. 28 laid off 3,400 employees and put its 800 Canadian stores on the block. Tweeter Home Entertainment Group, the high-end home entertainment store, is shuttering 49 of its 153 stores and dismissed 650 workers. Dallas-based CompUSA is closing 126 of its 229 stores, and regional retailer Rex Stores is boarding up dozens of outlets, as well as selling 94 of its 211 stores. […] Circuit City shares have fallen 24%, to $18.76, since the end of November, when the price war started. In the same period, Tweeter’s shares declined 32%, to $1.72, near a 52-week low, and Best Buy’s stock is down 9%, to $48.73. Shares of Rex Stores have been flat, down 0.7%, to $16.98. […] The carnage has one phrase written all over it: the “Wal-Mart effect.”