Technologizer » Retailers

After Circuit City bit the dust earlier this year, you probably thought that Best Buy would pretty much be on its own in the electronics super-retailer category. Think again — an old name is making a comeback. CompUSA has now opened 30 locations — mostly in Florida — with a new outlook on retail.

Company execs call their effort “Retail 2.0.” According to Wired, Systemax is bringing back the brand through stores with better lighting, more inviting stores, aggressive pricing and in-store web access. The web access is intended to allow customers comparison shop right from the store to ensure they’re getting the best price.

No doubt CompUSA is also using its connection through Systemax to Tiger Direct, its sister company, to help it be more competitive in this retail environment. Tiger has generally been competitive when it comes to price as well. In fact, whether you go to Tiger or the retail store, the prices on products will be the same.

CompUSA will not restrict the Internet either — so a user could just as easily jump on Amazon and see if they can get what they’re looking at cheaper there. It’s somewhat of a risk, but the company feels that it will give consumers more confidence and thus lead to a sale.

With Circuit City gone, if this concept works well it could be an opening for CompUSA to re-emerge as a competitor on a national level to Best Buy. It could also be a plus for consumers — Best Buy would not have free reign on setting prices.

Apple Store Traffic Flat, But Sales Are Down

Ed Oswald — Mon, 02 Feb 2009 17:11:21 +0000

Apple has taken quite a bit of pride in its successful retail operation, and rightly so. It has grown at a rate not seen by other electronics outlets as of late, and sales have been consistently higher every quarter.

Not so for the holidays. Traffic was essentially flat in the fourth quarter, down 1.8 percent. The real drop was in sales, falling 17.4 percent and showing that consumers are buying less, Needham analyst Charlie Wolf found.

“Consumers aren’t in a spending mood,” he quipped to Barron’s (subscription only).

Barron’s Mark Veverka also makes an astitute observation: Apple’s struggles at retail could reverberate. Malls will feel the difference as these stores have become attractions, bringing in new consumers that may have otherwise not shopped the mall.

Another effect is as Apple sells less, it produces less. This sends shockwaves backward into its whole supply chain. Companies that have produced iPod parts know this all too well: an adjustment in Apple’s ordering can cause them to completely miss their own financial goals (it’s happened).

While its certainly alarming to shareholders that one of Apple’s primary revenue drivers are falling upon hard times, consider this: Apple can afford some loss at retail.

As Doug McIntyre at BloggingStocks put it, these stores serve almost as a showroom of sorts for the company: “As long as Apple’s revenues are improving, there is hardly reason to complain,” he argues. I can’t argue with that.

A Brief History of Defunct Electronics Chains in the Form of Old TV Ads

Harry McCracken — Tue, 11 Nov 2008 01:59:02 +0000

Today’s news that Circuit City, American’s second-largest electronics retailer, has filed for bankruptcy left me sad. And, oddly enough, nostalgic. The City isn’t going out of business, but as I reflected on its woes I thought about all the electronics chains I’ve shopped at over the years–the vast majority of which are no longer with us. (If Circuit City were to close its doors, it would leave only Best Buy and RadioShack as truly national chains focused solely on consumer electronics of all sorts, right?)

Once I got nostalgic, I did what I often do in such situations: I headed to YouTube. Which is rife with old commercials for defunct electronics retailers. Many of these chains basically did themselves in through poor management or inability to change with the times, and I thought some of them were shabby even when I did business with them; But it’s fun to get reacquainted with them through the miracle of streaming video.

After the jump, a look back, mostly in chronological order sorted by the year of the chain’s demise (click on the year for more details on the circumstances of its death).

Highland (died 1993)
A deeply moving 1985 minidrama, explaining that you can get your busted turntable fixed right at the store–Highland apparently operated a sort of prehistoric ancestor of the Genius Bar.

Another Highland commercial that–as you’ll see if you watch it–unquestionably dates from the Cold War era.

Fretters (died 1996)
A 1985 ad for this chain, which was so unmemorable that I’d forgotten it ever existed even though I was once a semi-regular customer.

Silo (died 1996)
Fretters also ended up owning one-time Silo. Same bland personality, except for the farmland-themed name. Here’s a 1992 spot.

Incredible Universe (died 1996)
Actually, I’m sorry to say that I couldn’t find any Incredible Universe ads on the Web. But I’m including it here anyhow, because it’s gotta be one of the most memorable defunct electronics retailers. Founded by RadioShack owner Tandy Corporation, its stores were sort of anti-RadioShacks: astoundingly large. In fact, at 185,000 square feet, they were more than seventy-five times as a large as a Shack. The VCR aisle went on as far as the eye could see. Despite being a gadget nut, I found the Universe unnecessarily huge, which was probably a bad sign; the chain lasted only four years. But I digress–let’s get back to commercials.

Lechmere (died 1997)
Lechmere had a fabulous reputation for good prices and salespeople who knew their stuff when I was growing up in Boston–before Montgomery Ward bought it and did everything in its power to drive it into the ground. This ad from 1995 is a good reminder of just how much consumer electronics have changed in recent years: It features CD players, VCRs, tape-based camcorders, film cameras, and tube TVs, all of which were hot products.

This ad with Patriots coach Bill Parcells dates from around 1996. He may have led the Pats to the Super Bowl, but he couldn’t save Lechmere–it died in 1997. (I still miss it.)

Computer City (died 1998)
This chain, also owned by Tandy, was sort of a slightly more pleasant clone of CompUSA, which eventually bought and liquidated it. Watching this 1990s commercial, I’m once again struck by how much has changed–remember when computer stores had mammoth sections of CD-ROMs?

Is Circuit City’s Bankruptcy the Beginning of the End?

Harry McCracken — Mon, 10 Nov 2008 17:27:42 +0000

A week ago, the bad news about Circuit City was that it was closing 115 of its locations. New week, new bad news: The company has filed for Chapter 11 voluntary bankruptcy, a move that will will let it continue business without having to pay all its creditors all the money it owes them.

Bankruptcies aren’t always signs of impending corporate death. But they sure aren’t signs of robust health, either. Companies that file for bankruptices generally then segue towards one of two fates: hobbling along in a bumpy fashion thereafter, or folding.

In the short term, Circuit City’s bankruptcy will help keep it going. As the company noted in its press release today:

Despite aggressive efforts to secure vendor support, vendor concerns about the company’s liquidity and ability to pay for its purchases in this difficult economic climate have escalated considerably since the company provided a liquidity update on November 3, 2008, further impairing the company’s ability to conduct business and provide service to its customers.

That’s press release-ese for the fact that the City was having trouble stalking stocking its shelves with new products. It also says that manufacturers weren’t placated by its announcement of store closures and other cutbacks just a week ago.

The release continues:

Operating under the protection of Chapter 11 will provide the company’s vendors with assurances that they will be paid for merchandise the company receives post-filing so the company can be sufficiently stocked for the holiday selling season.

Or in other words, it’s hoping that manufacturers will think the bankruptcy will help Circuit City lope along and pay its bills, and that those companies will therefore ship it the products it needs in its stores in order to avoid having a disastrous holiday season.

If manufacturers continue to feel anty about providing the City with product on credit, it’ll be a crippling problem that could speed the company’s demise. A crummy Christmas could seal its fate; getting through the holiday season in one piece is, therefore, essential.

Under the protection of Chapter 11, the company plans to build on these recent restructuring initiatives. Through the additional flexibility that the bankruptcy process provides the company to restructure its operations, the company will continue its real estate rationalization by taking immediate steps to reject the leases at its previously closed locations. Further, as part of its restructuring efforts, the company will continue to assess the productivity of all assets, review additional cost-cutting initiatives and explore strategic alternatives to maximize the value of the business.

For which read: We’re busy getting out of our leases,we’re not done slashing our costs, and we’re willing to sell the business if anyone wants to buy it.

The press release ends with an optimistic statement from Circuit City’s CEO:

After considering a wide range of alternatives, it became clear that this course of action was a necessary and responsible step to secure our future. I am confident that, with our tremendous talent pool of the best-trained, most knowledgeable sales and installation teams in the business, we will emerge from this process as a stronger, more competitive organization that is well positioned to respond to and succeed in the ever-changing consumer-electronics industry.

Oops–that statement was actually from the CEO of Tweeter, another electronics chain. He made it last year when it filed for bankruptcy. Last week, Tweeter filed for bankruptcy again and announced it was closing all its stores.

Circuit City’s release includes this statement from its acting CEO:

We recently have taken intensive measures to overcome our deteriorating liquidity position. The decision to restructure the business through a Chapter 11 filing should provide us with the opportunity to strengthen our balance sheet, create a more efficient expense structure and ultimately position the company to compete more effectively. In the meantime, our stores remain fully operational, and our associates are focused on consistent and successful execution this holiday season and beyond.

Like I’ve said before, I’d like to see Circuit City figure its way out of this mess–not only for the sake of its employees, but also for consumers who benefit from the competition. But it’s far easier to sketch out scenarios in your head in which Circuit City doesn’t ultimately survive than it is to come up with ones which involve it bouncing back.

And here’s one more gloomy data point, in visual form: the performance of Circuit City Stock from 1984 to date: