Wal-Mart Stores Inc <WMT.N> is starting to devote less space to electronics at U.S. stores, but is definitely not walking away from any parts of the business.
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"We're not cutting our assortment," said Gary Severson, senior vice president of entertainment at Walmart U.S.
Selling electronics is difficult as shoppers have fewer discretionary dollars to spend and shop around for deals. Also, gadget prices have dropped, so even as Walmart sells more televisions the revenue associated with those sales slides.
"The industry is challenged right now and I think that it will continue to be a very competitive environment but I truly anticipate that it will get a little bit better," Severson, who has been with Wal-Mart since 1994, said in an interview.
Walmart is doubling up on wireless sections at the front of its stores and tablets are also selling well, with demand exceeding supply, he said.
Severson, whose own iPad got stolen from a rental car, said tablet supply issues should improve as the year progresses.
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While he would not single out the best sellers among Apple Inc <AAPL.O> iPads, Amazon.com <AMZN.O> Kindles and other such goods, he said consumers are definitely interested.
"We're very bullish on the growth that's going to happen there for the whole category," Severson said of tablets.
DEFLATION CAN BE GOOD
Even though Walmart's television sales were strong in the first quarter, as customers bought TVs with their tax refunds, overall entertainment sales declined in a mid single-digit percentage range.
The "exorbitant amount of deflation" in some categories crimped revenue, Severson said, and consumers were hit by economic issues including higher-priced food and gasoline.
The industry always has deflation and "honestly" it thrives on it, said Severson, as lower prices attract some customers.
As long as the number of units sold increases, "some deflation is actually good." he said. "We'll still see deflation but it will probably slow a little bit versus the last couple of years."
Industry dynamics are evolving. Best Buy Co Inc <BBY.N> is shrinking some stores and placing a bigger emphasis online as it tries to win back market share from Walmart and others, while more shoppers use gadgets to find deals.
At Walmart, some customer space in areas such as electronics is being eliminated to make room for other items such as fabric after a streamlined overhaul failed.
Walmart, which is focused on winning with low prices, also hopes to lock in sales by offering more product details and training staff about certain items to better compete against Best Buy and others with a service focus.
"We don't stand on service as our number one value to the customer, we stand on price," said Severson.
Still, service matters in some spots, such as picking the right phone and carrier. Walmart will add wireless sections at the front of another 150 to 200 U.S. stores by around September, he said. It currently has 200 of the spots.
Walmart sells phones from carriers including AT&T <T.N>, Sprint Nextel <S.N>, T-Mobile <TMOG.UL> and Verizon <VZ.N>, as well as prepaid phones from America Movil's <AMXL.MX> TracFone.
Walmart also continues to see growth in sales of laptops.
As for his favorite gadget, Severson was silent.
"That's like asking me which one of my children I love the most," said the father of six.
(Reporting by Jessica Wohl, editing by Matthew Lewis)