Wal-Mart to Begin Selling Custom-Built Computers

Wal-Mart Stores Inc. (WMT) will start selling build-your-own-computer components in more than one-third of its U.S. discount stores this month as it looks for ways to tempt shoppers to buy more than just low-margin food.

Wal-Mart currently offers only prepackaged bundles of personal computers and accessories in most of its stores. With the build-your-own-computer counters, shoppers can choose between several different components.

Such components include central processing units — the brain of the computer that powers its basic functions — as well as monitors, keyboards and mice that customers can combine to create customized packages they can load in a shopping cart and take home right away.

The retailer began testing build-your-own computer counters in about 20 locations last year, and is now introducing them in 1,200 of its 3,200 U.S. discount stores, spokeswoman Jolanda Stewart told Reuters.

It expects to offer the merchandise in some 1,400 stores by the end of the year, and possibly more in 2007.

Wal-Mart's entry into a category can raise alarms because the retailer's persistent price-cutting pressures competitors' profit margins. It has been blamed for bankruptcies in sectors ranging from groceries and toys.

But analysts said it was unlikely that Wal-Mart would pose much of a threat to the likes of Dell Inc. (DELL), which mastered the made-to-order computer model and offers a much wider selection. They also noted that Dell makes most of its money selling computers to businesses rather than individuals.

Wal-Mart, the world's biggest retailer, is the No. 1 seller of products ranging from dog food to diamonds, but it has not managed to gain as much market share in computers. Wal-Mart made a big splash last November when it sold laptop computers for $398 on the day after Thanksgiving, however.

Forrester Research analyst Ted Schadler, who follows the consumer technology sector, said Wal-Mart has the potential to become a key destination for computer shoppers.

"People buy on price," he said. "If Wal-Mart is competitive on price — which of course it will be — it's easy for Wal-Mart to be a destination."

Wal-Mart has been adding more upscale merchandise such as flat-panel televisions and fashionable clothing in the hope of getting customers to buy more than just food and commodity items, which carry low profit margins.