Apple and Wal-Mart: Do Opposites Really Attract?


Wal-Mart (s wmt) wants to grab the slice of the electronics pie that Circuit City gave up when it became financially insolvent, and it’s redesigning its stores to put itself in a better position to do so. Approximately 3,500 stores will be getting electronics department-centric makeovers this week, according to AppleInsider. The redesigned spaces will also feature in-store brand-focused boutique areas, like those found at Best Buy (s bby), for Apple (s aapl) and Nintendo (s nto), among others.

Unlike Best Buy, however, Wal-Mart currently doesn’t offer any Apple hardware beyond the iPod and iPhone line. Barclays (s bcs) analyst Ben Reitzes thinks that’s about to change. He sees the move to a specialized electronics “store-within-a-store” model of doing business as a precursor to the introduction of an expanded line of Apple offerings from the giant U.S. retailer, which would include desktop and notebook computers.

Reitzes basically sees Wal-Mart’s retail floor upgrades as a way to appease the very brand-conscious Cupertino, Calif.-based electronics company. “We believe Wal-Mart is actively pitching Apple to carry more products,” he said. “With Wal-Mart improving its retail displays, we believe that the mega-retailer could eventually earn the right to sell select Mac products without diluting Apple’s brand.” Thinking back to my last shopping experience at my hometown Superstore, I’m not sure how successful Wal-Mart can be at avoiding absolutely any and all brand dilution.

Which brings us to the real question: What does Apple stand to gain from an expanded partnership with Wal-Mart? Or, more importantly, what does it  stand to lose? First, Apple probably aims to do the same thing it did with the iPhone by offering Macs at Wal-Mart, which is to avoid sales slowdown or stagnation. It makes sense, because what better way to put your products in front of more people than by offering them through Wal-Mart, whose reach is massive?

That said, will improved exposure alone be enough to make it worth Apple’s investment? Wal-Mart is, after all, first and foremost a discount retailer. People shop there because of the low prices, which often come at a steep cost to manufacturers. I doubt Apple would undercut its price points, considering its general reluctance to do so in the past. That would make it a premium-priced brand in a retail environment that specifically caters to bargain hunters and frugal consumers. Not only would that not really benefit sales, but it could actually hurt them, since uniformed consumers looking only at price tags will behave like Microsoft’s (s msft) Laptop Hunters when presented with both alternatives on the same hyper price-focused sales floor.