Circuit City How the Once Mighty Have Fallen... and Back Again

[gene]

Circuit City is getting the band back together. Yes, that Circuit City. Once the largest consumer electronics retailer in America turned cautionary tale for executive mismanagement, has announced that it will begin opening new retail outlets and an online store in June 2016. The stores will include a mix of in-store products and kiosks on which visitors to the new stores can order from a library of over a million products.

Read: Circuit City How the Once Mighty Have Fallen... and Back Again

Do you think they will succeed this time? Be sure to vote in our poll and comment below.

 

[herbu]

"This time around, the new Circuit City franchises will more closely resemble RadioShack with small 2,000 - 4,000 square-foot stores"

I wonder what they will carry/stock? TVs? Home audio? I wonder if they'll go w/ the same brands as Best Buy? What will differentiate them?

Wouldn't it be cool if they carried demos of the major ID speakers. Not for sale, just for demo. But you could order from the store. I wonder if the ID companies would give them a big enough cut to make it feasible.

 

[highfigh]

So, a convenience store with snack machines? Yeah, that ought to work- nobody ever goes to a store knowing all of the answers, right? If they only have cashiers and a couple of sales people who aren't trained and they don't install some kind of system for answering detailed questions, it might be a rough ride.

 

[highfigh]

"This time around, the new Circuit City franchises will more closely resemble RadioShack with small 2,000 - 4,000 square-foot stores"

I wonder what they will carry/stock? TVs? Home audio? I wonder if they'll go w/ the same brands as Best Buy? What will differentiate them?

Wouldn't it be cool if they carried demos of the major ID speakers. Not for sale, just for demo. But you could order from the store. I wonder if the ID companies would give them a big enough cut to make it feasible.

ID=independent? If anyone wants to sell their speakers, will they insist on a decent listening room, or let the stores set them up for the convenience of the layout?

 

[herbu]

ID=independent?

Internet Direct. I wonder if Salk, Dennis, Rythmik, etc. would sell Circuit City demos at a discount, then give them a cut when someone ordered from their store.

I suppose some who are already at their mfg capacity wouldn't be interested... but some may. Outside of the ID speakers, I'm still curious how CC plans to differentiate themselves from BB.

 

[highfigh]

Internet Direct. I wonder if Salk, Dennis, Rythmik, etc. would sell Circuit City demos at a discount, then give them a cut when someone ordered from their store.

I suppose some who are already at their mfg capacity wouldn't be interested... but some may. Outside of the ID speakers, I'm still curious how CC plans to differentiate themselves from BB.

Why would they want to sell to CC at a discount- so they can sell more and make less? CC would be getting a cut, just by selling the speakers at the current price, but their overhead will determine whether they're actually making a profit at that price.

That model has caused many speaker companies to fail because it just became too big and top-heavy, then someone comes along and buys the company and whores it out or decides they want to make a lot of money, rather than a good/great product.

A Wisconsin store that competed with the other Big Box types with TV/Audio, furniture, appliances and small electronics closed a bit over a year ago. I worked for them when they still did car audio, but the company was making some serious money when I was there- annual total sales in the $700M range with 7 stores and a couple of distribution centers. Furniture is more profitable than most items and they sold a lot of it, but they eventually went belly up after becoming unable to reach customers in a way that worked. They had an online store, competitive prices, service departments and had their own extended warranty program, which was basically a slush fund once they recovered their initial bond investment. The company had those 7 stores when I worked there and then, someone had the brilliant idea to expand into the Quad Cities market. Apparently, that went well, so they went into St Louis and KC- I think this had everything to do with their downfall- too much, too fast and without management who could respond to what was needed. If CC starts small and keeps their overhead low, it could work, but they'll have to offer goods that are on par with their competition and then, something the others can't, or won't.

 

[markw]

I would like to see it succeed but with competition form the internet in general it could be difficult.

What someone said is that using them as a showroom and ordering the desired item could work if they don't charge shipping costs and have reasonable delivery times. Having an item delivered to the store for customer pickup seems to be a workable compromise, if the customer can/will wait a few days.

This could assure a showcase for their products on a local level for those who aren't comfortable buying sight/sound unseen but the manufacturer would have to work to CC that their prices cannot be bested by an on-line dealer.

 

[KenM10759]

It should work and provide a competitive place to BB for those who see value in shopping there. Of course they have to step carefully, but if they mind their financials and don't extend too far too fast they'll be successful.

As to internet direct vs. brick & mortar, consider SVS. They now have a growing network of retailers selling their product in stores. Having bought at one (and going back this weekend for another sub), I talked with the co-owner of the store and asked if they had also taken in the speakers. Yes, they just started and it's proving worthwhile even though they offer B&W, Paradigm, KEF and a couple others.

Asked why SVS saw fit to have retailers selling at their own internet pricing, his opinion (combined with working things out with SVS) are that SVS had reached a saturation point with internet sales and growth had slowed. They want to grow more, and this venture into stores has given them that. He was told that he's the biggest outlet in the northeast already and it's really taking off. Used to be I could walk in and they had stock on SB1000, PB1000, SB2000, PB2000 and the Ultras. They can't keep the 2000's in stock, the things are flying out the door. Does SVS make less per unit giving a 20% or better discount to a reseller? Yes. They make up for it by reducing the total number of returns and shipping costs, plus the increased volume of sales. When a retailer can demo in-store, no matter what you think, fewer come back. It's working for the dealer, and for SVS.

 

[highfigh]

I would like to see it succeed but with competition form the internet in general it could be difficult.

What someone said is that using them as a showroom and ordering the desired item could work if they don't charge shipping costs and have reasonable delivery times. Having an item delivered to the store for customer pickup seems to be a workable compromise, if the customer can/will wait a few days.

This could assure a showcase for their products on a local level for those who aren't comfortable buying sight/sound unseen but the manufacturer would have to work to CC that their prices cannot be bested by an on-line dealer.

And the pricing is where MAP and UAP come in- Minimum Advertised Price is one thing, but in person, it can be sold for any price. UAP is where the manufacturers have a minimum price and require their dealers to abide by that as a way to prevent erosion of profits, brand reputation and take the whole market down to sewer level. It's not price fixing because they're not setting one price, unlike Bose and Apple. If they have a sale, it's usually only 10% off and doesn't happen often. Manufacturers who care about their real dealers go after online sellers who offer products below MAP/UAP and many have a notice on their website stating that the products won't come with a warranty if bought from unauthorized sellers- some even have a list of these. It's the same as the Gray goods that came in when Walkman and many other small electronic items were becoming popular.

Best Buy already does the "Ship it to the store" and for those who are willing to wait, it works. Some want or need it now.

It almost sounds like the old 'Catalog' stores. Display what makes the most profit and order everything else.

 

[Shadow_Ferret]

A Wisconsin store that competed with the other Big Box types with TV/Audio, furniture, appliances and small electronics closed a bit over a year ago. I worked for them when they still did car audio, but the company was making some serious money when I was there- annual total sales in the $700M range with 7 stores and a couple of distribution centers. Furniture is more profitable than most items and they sold a lot of it, but they eventually went belly up after becoming unable to reach customers in a way that worked. They had an online store, competitive prices, service departments and had their own extended warranty program, which was basically a slush fund once they recovered their initial bond investment. The company had those 7 stores when I worked there and then, someone had the brilliant idea to expand into the Quad Cities market. Apparently, that went well, so they went into St Louis and KC- I think this had everything to do with their downfall- too much, too fast and without management who could respond to what was needed. If CC starts small and keeps their overhead low, it could work, but they'll have to offer goods that are on par with their competition and then, something the others can't, or won't.

Are you talking about American TV? As a consumer, their closing came as a shock. They always seemed to be doing well. It was disappointing, because they were a local business.

Too many stores are closing. The industry needs more competition and consumers need more brick and mortar stores to audition equipment. I hope Circuit City succeeds.

 

[highfigh]

Are you talking about American TV? As a consumer, their closing came as a shock. They always seemed to be doing well. It was disappointing, because they were a local business.

Too many stores are closing. The industry needs more competition and consumers need more brick and mortar stores to audition equipment. I hope Circuit City succeeds.

That was American. I went to the Brown Deer store and saw that the floor displays were more sparse after they stopped selling Small Electronics. The next time, I talked with some of the people who were there when I was and one told me they had let several others go, some with 25-30 years in the company. That said a lot and the place became less populated as time went on. I saw it coming, but was surprised when it came. I thought they should have been able to turn it around, but it seems that some of the management wanted to retire and they couldn't find a buyer. Some of the employees went to Steinhafel, I would think some went to Colders, etc. Flanner's hasn't added a lot of people.

 

[highfigh]

It should work and provide a competitive place to BB for those who see value in shopping there. Of course they have to step carefully, but if they mind their financials and don't extend too far too fast they'll be successful.

As to internet direct vs. brick & mortar, consider SVS. They now have a growing network of retailers selling their product in stores. Having bought at one (and going back this weekend for another sub), I talked with the co-owner of the store and asked if they had also taken in the speakers. Yes, they just started and it's proving worthwhile even though they offer B&W, Paradigm, KEF and a couple others.

Asked why SVS saw fit to have retailers selling at their own internet pricing, his opinion (combined with working things out with SVS) are that SVS had reached a saturation point with internet sales and growth had slowed. They want to grow more, and this venture into stores has given them that. He was told that he's the biggest outlet in the northeast already and it's really taking off. Used to be I could walk in and they had stock on SB1000, PB1000, SB2000, PB2000 and the Ultras. They can't keep the 2000's in stock, the things are flying out the door. Does SVS make less per unit giving a 20% or better discount to a reseller? Yes. They make up for it by reducing the total number of returns and shipping costs, plus the increased volume of sales. When a retailer can demo in-store, no matter what you think, fewer come back. It's working for the dealer, and for SVS.

I worked for the second Jamo dealer in the US and while they didn't have the internet to use as a springboard for their brand, we did a whole lot of business with them because we were excited by their products and enjoyed dealing with the company. Once their in-wall/ceiling and other similar items for installation had been around for a while, you couldn't swing a dead cat without hitting someone who was selling that brand, at least in Wisconsin and yet, I still see comments from people who have never heard the name. They came to the US in '79 and by 1995, they were the #3 manufacturer of in-box speakers in the world, behind Bose and The Harmon Group. If it takes a whole group to be #2, I really don't think it counts.

Call me stoopid, but I still think a B&M store can work, but it can't be too large with a cast of thousands.

OK, don't call me stoopid.

 

[j_garcia]

Best Buy said they would open smaller, more focused stores also. I haven't seen any. It does not sound like a recipe for success.

 

[highfigh]

Best Buy said they would open smaller, more focused stores also. I haven't seen any. It does not sound like a recipe for success.

If they don't own the real estate, they probably pay a snootful for their lease, especially in malls- common area costs can be exorbitant. Also, they would need to pare the displays to a smaller size and that means they need to cut out the fat, which takes up space but doesn't provide much profit. The store closest to me has been reconfigured a couple of times in the last year and they have more open areas, which tells me they may be testing the theory and finding out just how much space they need. I think their home theater display could be half as large, formed into a smaller box with all of the accessories around the perimeter. That and the open areas would probably make it possible to use a store of half the size.

 

[cpd]

That was American. I went to the Brown Deer store and saw that the floor displays were more sparse after they stopped selling Small Electronics. The next time, I talked with some of the people who were there when I was and one told me they had let several others go, some with 25-30 years in the company. That said a lot and the place became less populated as time went on. I saw it coming, but was surprised when it came. I thought they should have been able to turn it around, but it seems that some of the management wanted to retire and they couldn't find a buyer. Some of the employees went to Steinhafel, I would think some went to Colders, etc. Flanner's hasn't added a lot of people.

I may be dating myself with this comment, but as a kid I dreamt of owning a Firenze bike signed by TV Lenny!

 

[fmw]

With the exception of groceries, clothing and a few other product categories, retail is repidly being replaced by the internet. I see no point in putting up stores that allow people to order on the internet. they can do that at home. Sounds like a terrible idea.

 

[cpd]

Best Buy said they would open smaller, more focused stores also. I haven't seen any. It does not sound like a recipe for success.

I'm not sure if this is what you are referring to, but in my area Best Buy has "Express" stores with limited, focused stock (phones, tablets, etc.). They are not kiosks, but are actual stores. They take up a half storefront in the malls. I have no idea what success they have had, but they have been there for awhile now.

 

[highfigh]

I may be dating myself with this comment, but as a kid I dreamt of owning a Firenze bike signed by TV Lenny!

He sells electric bikes in Madison- he's having a blast.

 

[highfigh]

With the exception of groceries, clothing and a few other product categories, retail is repidly being replaced by the internet. I see no point in putting up stores that allow people to order on the internet. they can do that at home. Sounds like a terrible idea.

I just don't see an end to people seeing a store and being curious or convenient. If retail ends, the country is totally screwed because many millions are employed by retailers and all of the real estate would go to seed, or manufacturing....oh, right....maybe shelters for those who lost everything.

 

[j_garcia]

I'm not sure if this is what you are referring to, but in my area Best Buy has "Express" stores with limited, focused stock (phones, tablets, etc.). They are not kiosks, but are actual stores. They take up a half storefront in the malls. I have no idea what success they have had, but they have been there for awhile now.

Yes, but not in all areas, so I think they stopped doing opening them.