Walmart and Best Buy Place Their Bets and Position Themselves For Their Next Battle
WATCH THE BIG BOYS:
The next big thing in TV’s, the largest category in Consumer Electronics, isn’t going to be 3D. So put the dorky glasses down and think about what recent moves by the big boys signify.
- Walmart buys VuDu (streaming movies) (credit: ZatzNotFunny)
- Walmart spent over $100M to buy the whole cow
- Best Buy Bankrolls Tivo’s Marketing (credit: Davis Freeberg’s Digital Connection)
- Tivo’s market cap is $1 billion, so Best Buy is renting the cow for now. They are spending $20M to promote Tivo this year … Tivo itself only spent $5M last year.
THE NEXT BIG THING:
The next battleground for hearts, minds and wallets of consumers will be connected / internet TV. Don’t get hung up on the idea that these moves by BBY and WMT are solely focused on the consumer demand for the added features that connected TV’s provide. Here’s how we see things playing out:
Short term: the need to address consumers growing desire for streaming video is important. Walmart and Best Buy are gaining access to existing relationships & infrastructures to offer their customers access to their own branded digital video services.
Near term: Walmart and Best Buy are already the leading retailer of TV’s. Best Buy has an obvious opportunity to integrate Tivo capabilities & connectivity into their own Insignia line of TV’s. It is not a stretch to think that both Walmart and Best Buy persuade leading TV vendors to integrate these services into TV’s for sale in their respective stores.
Long term: the bigger picture of these moves is about more closely connecting the retailer to the consumer in their home. In a fragmented media world where it is increasingly difficult to reach consumers via traditional means, Walmart and Best Buy are hard wiring themselves to their consumers. These new platforms enable a retailer to not only offer the obvious of streaming movies & other digital downloads, but also positions them to take advantage of future advances in connectivity and digital offerings, including ones geared around shopping at home.
For more speculation on retailers connected TV & on demand services, check out these articles:
- “Wal-Mart enters the battle of TV vs. the Internet.” (credit: Fortune)
- “Best Buy Betting Big on Tivo” (credit: NewTeeVee blog)
Now that is about as far as I can go without staying from the mission of Retail Leverage. We know that our readers value that we help keep them informed on big picture news that has retail impact, but we aren’t really focused on the product or technology. The reason I share this article with you is that you don’t have to be selling TVs or set top boxes to walk away with ideas that you can apply in your own brand/business.
HOW CAN YOU ADVANTAGE A PARTICULAR RETAILER?
Look at the lengths that Walmart and Best Buy are going to position themselves against each other in the connected TV space. Walmart’s strategy involves acquiring a company (VuDu), and Best Buy’s strategy involves entering into an exclusive relationship (Tivo).
The real story is the retailers fight against each other. Get over the battle you are fighting against other brands – THE RETAILER DOESN’T CARE.
Fortunately though, you don’t have to be in a category that is in the cross-hairs of retailer corporate strategy teams to be able to employ the “advantage” strategy. Simply put, If you want to get the buyer’s attention, bring something to them that strengthens their hand versus their competition.
As assortments narrow and the tentacles of private label expand, brands are being forced to make bigger bets on specific retailers, product lines, and skus. Too often, people wait to make tough decisions until their hand is forced, and sometimes it is too late. While the “advantage” strategy might not be right for you at this time, you can learn a great deal from the exercise. Good luck!