Will the third time be a charm or last strike for Circuit City?
Some hear the name Circuit City and think iconic retailer. Others hear the name and failed retailer comes to mind. Regardless of one’s recollection, there is no denying the consumer electronics brand is not likely to get another chance at retail success should it fail this, its third time around. (The first was as a the number one chain of consumer electronics stores that fell into bankruptcy; then as an e-tail entity owned by Systemax.)
According to reports, the Circuit City name is being revived by Ronny Shmoel and Albert Liniado, a couple of retail veterans from the New York metro area. The first store opening is planned in June (Dallas has been identified as potential site) along with the new circuitcity.com. Unlike the big box stores that Circuit City used to operate, the new version will be in the 2,000- to 4,000-square-foot range.
In an interview with TWICE, Mr. Liniado said the retailer would focus on profitability. Besides keeping overhead low with small footprint stores, the company planned to use private label to boost margins along with using minimum advertised pricing (MAP) and a unilateral pricing policy (UPP) for branded goods.
Stores will be staffed with associates working on a salary plus commission basis. The goal is to have between 50 and 100 company-owned stores operating by the end of 2017. The company also foresees up to 200 more locations eventually being opened under franchise agreements.
Circuit City plans to appeal to Millennials with an emphasis on service in its stores. The product selection will include smartphones, tablets, notebooks, gaming products, headphones, drones and 3-D printers. Touchscreens will be located in-store to give shoppers access to as many as one million SKUs online.
Early descriptions of the company’s plans for its stores has led some to question whether it will be similar to RadioShack. Circuit City’s CEO, Mr. Schmoel, dismisses the comparison. He told TWICE that the new Circuit City is “going to be all about connectivity.”
Anthony Chukumba, an analyst with BB&T Market Capital, is not optimistic about Circuit City’s prospects.
“The last kind of small store consumer electronics retailer of any substance was RadioShack, and they just went bankrupt,” Mr. Chukumba told Minnesota Public Radio. “So, we might want to chalk this up to the triumph of optimism over experience.”
- Circuit City is planning a comeback, heading to Dallas for return – The Dallas Morning News
- Circuit City Set To Return This Spring – TWICE (tiered sub.)
- The New Circuit City: We Ain’t No RadioShack – TWICE (tiered sub.)
- Long-defunct Circuit City starts up again, targeting millenials – Minnesota Public Radio
Do you think Circuit City is more likely to succeed or fail in its new iteration? What will Circuit City need to do to be successful as it opens its first stores and website?
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24 Comments on "Will the third time be a charm or last strike for Circuit City?"
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Unless the new Circuit City can out-sell and out-service Best Buy, it is toast. And that will be very hard to do in a commodity business. How will Circuit City be able to buy for less than Walmart or Best Buy? They can’t hire employees for less without sacrificing customers, so it seems like a long slog ending the same way as the two previous incarnations.
Why would you want to enter a market and compete with Amazon, Walmart and Best Buy? Again. As a former Circuit City employee I’d love to see the brand revived, but I’m certainly not holding my breath.
Have a laser sharp understanding of customers then surprise and delight them.
Retail ain’t for sissies!
There are inherent pressures on this channel of retailing in that flat screen TVs comprise such a big percent of the dollars, but yet are becoming very commoditized, competitive and accordingly low-margin. With that said, I believe these stores are facing some strong headwinds.
I do like the idea of a 4,000 square foot store, but it must be merchandised with plenty of product from electronics, computing and other electronics. If not, the shopper will likely not see it as viable option for major purchases, but rather only a place to go when you can’t find a rare accessory, (similar to RadioShack).
In my view, anything smaller than 4,000 square feet would be difficult to stock with enough variety to bring shoppers into the store as an alternative to Best Buy and other larger electronics stores.
Further, these smaller stores could be made stronger by having a cogent omnichannel plan: that is, providing shoppers extended inventory via a kiosk in the store that could be delivered same-day or at a minimum very quickly.
I never say never … but this is pretty close to that mark.
Question: Aren’t there about a thousand other great retail concepts that you could invest in/develop that would be a much better place to put your money into?
This has failure written all over it. I don’t see any benefit or point of differentiation, critical in a saturated market.
What is the new Circuit City’s value promise to the customer? What can you only get, or find a innovative way to buy, at the new Circuit City? “Profitability” is an internal mission, not a customer-focused plan for building a reputation. We need to hear more of their story. It’s a good name — what else is it?
It is always difficult to unknow what you know. Whatever format the revised Circuit City takes, big or small, it is saddled with the image of a failed retailer. Circuit City joined the ranks of other once-iconic retailers (Borders, Blockbuster, Tower Records, Linens & Things) who failed to recognize changing environments and thus did not adapt accordingly.
From a consumer perception point of view, a negative image needs to transition from negative to neutral in order to eventually become positive. If this intended format (small store) and demographic (Millennials) is to succeed, it would be better served by a blank canvas or neutral image than carrying the baggage of Circuit City.
You always wonder if they know something that you don’t … but I doubt it. I’d say they’re just mouthing aphorisms about profitability, customer service, small footprint, private label. I think they’re focusing on products that will be in demand. On the other hand, it is probably time to get the hook.
While I don’t enjoy being cynical, the fact is that owning the rights to a name without having any of the people who ran the original company in any of the original store locations, to this naive observer, is tantamount to nothing. I consulted to Circuit City in its heyday but I don’t see from where the excitement would come today. I am not at all sure that, after so many years of inactivity, the brand name has much value.
I don’t get it. If these investors want to throw their money away I will send them my address. The Circuit City name and business did not set the world on fire twice before. So what makes them think they can succeed this time in a world where Best Buy, Target, Walmart and Amazon will willingly sweep the floors with them again? They can say what they want, but the model appears similar to RadioShack. And they are talking about franchising? Get real folks. At least they could try it using a different name.
My first thought was, “Do these guys need a tax write-off?” Wondering how you resurrect a brand in a retail environment that is loaded with competition that includes onsite (Best Buy, big box stores, etc.) and online (Amazon and others who struggle to compete with Amazon)? If it works, I’m sure our kids will be studying the case study in their college marketing class.
What do they need to be successful? Aside from being super savvy retailers, they need something that will take them out of the commodity trap. They need something that makes them different. Otherwise, they are just another competitor entering an already established market.
I love their gumption and wish them great success.
OK, here’s a radical interpretation, based on no actual evidence:
What if the new Circuit City is really a play to create a brick-and-mortar entity that would be an attractive acquisition for Amazon or maybe Alphabet?
Its founders describe a long-tail assortment strategy and a service orientation in a lower-overhead physical environment that could fit in malls or downtown. Fold in a geek bar for the rest of us, and they might have something that draws enough traffic to be attractive as a roll-up candidate.
As far a dusting off the old brand name goes — well, I don’t think it adds a lot of value to consumers. Then again, it has the business press speculating. There’s some PR value in that.
This is a guaranteed recipe for failure. MAP pricing? Which planet are these folks living on? Circuit City will fail again under these price situations, especially with price-sensitive Millennials. Who will pay top dollar for a product when they can purchase it for much less and get it delivered to their doorstep? The new owners need to learn from the mistakes of the old Circuit City and the other failed electronics retailers instead of repeating them. Take a page from Amazon’s book.
First big mistake is using the Circuit City name. It is not iconic to Millennials and that is who they are targeting.
Secondly, I would have gone for a store that sounded more coffee shop-like. A personal experience where shoppers could hang out, play with gadgets, share their own connectivity stories, etc. Like hanging at the record store in bygone days. That might have had a chance. This? Not so much.
But that’s just my 2 cents.
No one is going to shop there for old time’s sake! They need something compelling over and above Best Buy, Staples and Amazon. What could that be? Connectivity? Well, that is important but I think Best Buy is already onto that.
The largest obstacles to the company are price, practicality and margin. The commodities found in these stores can be purchased and delivered in one to two days. Consumers wishing to exchange or simply change their minds may do so from home or any place of their choosing at will. This is a market that e-commerce retailers are aggressively attacking and making significant advances in using lower overhead costs to supplement total consumer costs and adding online live technical assistance. The brick-and-mortar stores are not only facing this but pressures from the big box retailers as well. Without significant change designed to sharply take on the now prominent competition winning is doubtful.
The new Circuit City appears to be a catalogue store with 3,000 square feet and a 1 million item endless aisle. Where is the excitement that will bring consumers into the store? They appear to be late to the party with cell phone and tablet sales having reached their peak. So far it appears millennials like to rent and not buy and want lots of handholding, like Geek Squad. From what little I know of this venture, unless they can significantly reduce the supply chain and operating costs, it will not be successful. I don’t see them taking the video game business away from Game Stop.
Hmmm … how about bringing back Enron, or Lehman Bros? Heck, how about the Penn Central? All probably have more brand equity, even — especially — if they don’t have any at all.
Dumbest. Idea. Yet (this year).
This could work, if it’s in a small-store concept with knowledgeable associates who can help customers choose. If it’s another where-is-it dauntingly big box, it has no chance.
Opening a new “connected” retail store — yawn! I’m not sure who this store will appeal to or why they think there is a need/demand for this. Best Buy seemingly won the war and is the last national CE store, and even they can’t win. Even Millennials buy online from their phone and find the lowest price and have a Gen X show ’em how to use it.
Circuit City will have to work very hard to differentiate itself in such a crowded electronics space. If they can pull off a re-brand that focuses on exceptional service and carry products that shoppers love (at prices they’re willing to pay), then they’ll be on the road to success.
And Amazon is opening at least several hundred “bookstores” — Circuit City’s best chance of success is a very deep partnership with Amazon. Best Buy is back on track from where they were a few years ago, so it’s really hard to see where the opening is here.
Seems as if, based on the survey, most are on the same page. Online shopping is the most of choice for consumer electronics and the days of the “salesperson” intensive atmosphere for consumer electronics “superstores” are doomed.