Wal-Mart Finally Defends Itself from the Kindle

While this move by Wal-Mart (NYSE:WMT) is largely a symbolic attempt to curb the process known as showrooming whereby a consumer walks into a physical store to help guide their purchase and then buy the item on-line from a place like Amazon.com (NASDAQ:AMZN), it is an important step in the fight for local retailers to retain customers for easily cross-shopped items such as technology.

There is no value-add for Wal-Mart to buy a piece of consumer electronics from any particular vendor beyond price.  A Wii is a Wii after all.  The difference is potential convenience of being able to buy something right now as opposed to having to wait for it to be delivered.  But Wal-Mart’s are not convenient places to make one-off purchases.  In fact they are the opposite of convenient for that behavior.  For them to choose to stop selling the Kindle Fire the same way that Target (NYSE:TGT) did a few months ago is admitting that 1) their on-line user experience is not good and 2) that they are unwilling to give up on the consumer electronics market.

Amazon and companies like Newegg are taking a greater proportion of electronics sales while the big stores fight amongst themselves for a piece of an ever-shrinking pie. All of the so-called big-box retailers have the added problem of rising fuel costs to add to their misery.  It isn’t just the relatively rural that no longer can afford to drive to the store, but even a trip across town is a real cost to be considered at $4+ per gallon gasoline.  The interstate-strip mall business model will continue to erode.

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Tom Luongo

About Tom Luongo

Tom Luongo is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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