It's no secret that rivalry in consumer electronics is heating up, and today the Associated Press reported that Japan's Sony (NYSE:SNE) is "more aggressively" pursuing an increased presence within the aisles of several important discounters.
According to the article, Sony is making a bid to offer a more extensive variety of wares in Wal-Mart (NYSE:WMT) and Costco (NASDAQ:COST). (Its products already appear on the shelves of consumer-oriented retailers Best Buy (NYSE:BBY) and Circuit City (NYSE:CC), with a limited number of lower-end televisions and digital cameras offered at Wal-Mart, according to Forbes.)
Wal-Mart is well known for playing hardball with its suppliers on pricing, impacting profit margins, implying that Sony will have to exercise a certain degree of acumen in these talks. However, the potential of the deal illustrates the massive importance of the discounters in the consumer market.
And Sony's got some reason to worry in that regard. It said in its most recent quarterly conference call (courtesy of Thomson StreetEvents) that it experienced healthy sales of flat-panel televisions and digital cameras, and it described its rear-projection TVs as "popular." However, success was offset by a decline in sales of its portable audio products (likely a mighty blow to the company that brought about that '80s sensation, the Walkman, and has been among many attempting to unseatApple's (NASDAQ:AAPL) iPod).
Sony also recently announced plans to open specialized retail stores, much like Apple and Gateway. (This, of course, is an approach through which rivals have experienced varying degrees of success.)
The flat panel TV market, for example, is popular with consumers and companies trying to woo them. Fool contributor Rich Smith recently explored brewing price wars amidst the big players in this area. There's also been a blurring of the lines between electronics and PC giants, with Dell (NASDAQ:DELL), for example, hitting consumer electronics hard, which we reported as early as last September.
The big picture is, competition's building; meanwhile, there are some reasons to wonder whether consumers will tighten up their wallets again. For many consumer products giants, sizeable percentages of their products stock the shelves at Wal-Mart -- arguably making the Bentonville behemoth the name in consumer culture. So for Sony, this talk's not cheap.
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Alyce Lomax does not own shares of any of the companies mentioned.
