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Wal-Mart health is good for studios...
November 17, 2008

...if not other retailers.

Amid worldwide economic turmoil, Wal-Mart Stores last week said its third quarter sales (for the period ended Oct. 31) were up 7.5% over the same period a year earlier, while comp-store sales also bested 2007, rising 2.7% at Walmarts and 4.5% at Sam's Club. 

By contrast, Target's comp-store sales fell 3.3% in the quarter, compared to a gain of 3.7% in the same period in 2007. Best Buy's  comps fell 2% in September and 7.8% in October, and the leading C.E. chain has said it expect to see comp sales declines of 5% to 15% for the balance of its fiscal year (through February).

For the fourth quarter, Wal-Mart expects U.S. comps to rise 1% to 3%--no huge gain, but a heck of a lot better than its competitors are expecting.

Chalk it all up to the retailer's position as the discounter of all discounters--the quintessential retailer for our distressed times. Wal-Mart chairman CEO Lee Scott said it -- "At a time when our customer is feeling the pressure of a tough economy, Wal-Mart's price leadership is more important than ever." 

Given the fact that Wal-Mart is the single largest retailers of DVDs in the world, this is good news for the studios, which see more than a quarter of their disc sales go through the chain. A relatively healthy Wal-Mart can go a long way toward keeping home entertainment sales healthy.

In the meantime, consumers' growing reliance on the behemoth during tough times may be bad news for other retailers of home entertainment products. The prevailing wisdom among economists is that once people become accustomed to shopping at Wal-Mart, they may return some--but not all--of their business to their preferred retailers when they've got more money to spend again.

Posted by Marcy Magiera on November 17, 2008 | Comments (0)