Target expands presence in consumer electronicsby Martin Moylan, Minnesota Public Radio
St. Paul, Minn. — Target is aiming to get more of a charge out of the consumer electronics business.
Target announced Wednesday it's expanding its selection of wireless phones. Customers can also avail themselves of an electronics recycling program, and free tech support for TVs and other electronics they buy from Target.
"All of that will help them become a destination for electronics, and I think that's very important," said Howard Davidowitz, a retail analyst and consultant.
Even though there's a lot of competition in that market from its archrival, Walmart, as well as Best Buy, Target wants to become a go-to store for shoppers seeking electronics.
Davidowitz says the move puts Target ahead of Walmart for service, though not for overall breadth and depth of consumer electronics products. Walmart offers a lot more TVs, computers and other electronics than Target does.
Davidowitz also says the move positions Target to take some sales away from Richfield-based Best Buy, the largest consumer electronics retailer.
Davidowitz says Best Buy is far superior to Target in both selection and service. But Target gets a lot more people into its stores.
"Target has a huge number of footsteps," he said. "And if the electronics get enhanced enough, I think they'll do some additional business because they've got a great reputation."
Analysts say Target's focus on phones is especially smart, in part because they don't require much sales space.
"The focus on mobile phones makes a lot of sense, if you think about the growth that is in front of that business, especially smart phones, which are more profitable to sell," said Matt Arnold, a retail analyst with Edward Jones. "The data plans are more profitable to sell. And that is where the consumer is focused right now."
Target says it has a partnership with RadioShack to let people buy and activate cell phones from every major wireless carrier. Last October, Target launched tests in 104 stores. Target plans to have mobile phone centers in the majority of its some 1,700 stores by the middle of next year.
Target says the new services complement its nationwide TV delivery and setup service, which was introduced in January.
But details about Target's electronics push are sketchy. Target said it could not provide an executive Wednesday to discuss the effort, owning to scheduling conflicts.
With its recycling program, Target will take iPods, cell phones, DVDs and video games in trade, giving customers Target gift cards for them.
Target says customers can expect to get about $25 for an average, older iPod or older mobile phone. A used video game may fetch $7, and some iPhones, up to $200.
The trade-in program has already launched in northern California, and will be available in some 850 stores by the end of this year.
Target says its free technical support will be offered over the phone. Customers can call with questions such as how to sync their iPods with their computers, or how to set up wireless home networks. The help line is available nationwide to anyone who buys an electronic item at Target. All they have to do is provide a receipt number.
Dave Heupel, an analyst with Thrivent Financial for Lutherans, expects free tech help will be a big hit with consumers.
"As you get into some of these areas like televisions and phones and some of the more complex items in consumer electronics, customers really feel lost if they don't feel they have someone to call," said Heupel. "So I think this is a step in the right direction, to try to drive home that you can find a good value here and we'll also provide you the support as well."
But it's unclear how good the tech support will be -- or if the tech experts will be in the U.S. or overseas.
Matt Arnold, the Edward Jones analyst, expects Target's electronics push will provide a good --but not spectacular -- kick to Target's sales.
"It's not a giant growth opportunity, relative to some of the others that Target has," he said. "But it is a nice complement that should add a little bit."
Target doesn't disclose how much of its sales come from consumer electronics.
Arnold says Target's big sales boost is likely to come from groceries, as its stores steadily devote more shelf space to food.
But Target figures that as more customers shop for food, they may be enticed into picking up a TV, smart phone, iPod or other electronic toy.
(The Associated Press contributed to this report)
- All Things Considered, 08/25/2010, 5:54 p.m.