Wal-Mart Holds the Key to Holiday Success for Dell

Edward Fox, director of the J.C. Penney Center for Retail Excellence in SMU's Cox School of Business, talks about Wal-Mart's importance to a successful holiday season for Dell and Hewlett-Packard

By Melita Marie Garza

Nov. 20 (Bloomberg) — Move over Best Buy. Wal-Mart will determine the fortunes of Dell Inc. and Hewlett-Packard Co. this holiday season.

The number of consumers planning to shop for electronics at Wal-Mart Stores Inc. rose 50 percent from a year ago, according to a survey this month by ChangeWave, a market researcher in Rockville, Maryland. At the same time, 14 percent fewer shoppers said they would go to Best Buy Co., the survey found.

Bargain hunters will rule this holiday season as consumers look for savings amid a global recession, squeezing margins on personal computers. Dell, which has trailed Hewlett-Packard in the PC market for the past two years, is trying to boost profitability after expanding into 15,000 retail outlets. While those stores bolster sales, average prices fell 8 percent in the third quarter, according to Sanford C. Bernstein & Co.

“Wal-Mart is going to cut prices deep, early in the holiday season,” said Edward Fox, director of the J.C. Penney Center for Retail Excellence at Southern Methodist University in Dallas. Wal-Mart may follow up with more price cuts, he said. “What kind of a bloodletting it is going to be depends on the consumer response to early discounts.”

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