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For some time now, Wal-Mart's tried to juice sales by peddling high-ticket goods. The company's wish may finally be coming true--thanks to consumer nervousness over lead-tainted toys.
Concerned parents still need to find something to put under the tree amid the lead fears. That means higher-priced electronics and sporting goods.
"The growth in electronic purchases is a bonus for Wal-Mart as they generate high-average tickets," says Britt Beemer, president of America's Research Group, which tracks consumer behavior.
Surveying Wal-Mart shoppers during the first weekend in December, America's Research Group found that 32% planned to buy electronic goods at the store this year, compared to 20% that did so in 2006. About twice as many as last year said they were shopping for sporting goods (11.3% vs. 5.7%).
Those gains come mostly at the expense of toys, which polled at 37% vs. 39% a year ago, and children's clothing, which dropped all the way down to 10% from 18% last year.
On Wednesday, the Michigan-based Ecology Center put out a report saying that 35% of 1,268 toys tested showed traces of lead paint. About half of those, the report said, had levels high enough to trigger a recall. The Toy Industry Associated disputed the report,
No matter who's right, parents will err on the side of protecting their children. This year's theme is non-chewable gifts for kids, which means more videogames and baseball bats and fewer small toys and shirt sleeves that can go into their mouths.
That hurts a company like Toys 'R' Us, one of the featured retailers in the Ecology Center's toy-testing laboratory. But it's just fine for Wal-Mart (also a major seller of the Center's test sample), where customers can just slide over to another section of the store to find Christmas gifts.
Already coming off a better-than-expected third quarter in which it grew earnings 8% from a year earlier, the Bentonville, Ark.-based Wal-Mart seems well positioned to improve on last year's miniscule 1.5% rise in same-store sales for the November-through-January holiday period.
"They've returned to price leadership," says Howard Davidowitz, chairman of Davidowitz & Associates, a New York-based retail consultancy.
Wal-Mart plans to keep a steadier flow of customer traffic this year by planning out an early discounting season rather than waiting until mid-December to clear out slow-moving merchandise. Consumers' acceptance of Wal-Mart's flat-screen TVs and other expensive gizmos is a stark contrast to their rejection of its higher-end clothing. No one wants to say they buy their clothes at Wal-Mart, but anyone will get a Sony there.
"That's why Circuit City and Radio Shack are closing so many stores," Davidowitz says.
And with more people ambling over from the toy department, the season could be a little bit jollier in Bentonville this year.