Circuit City's Sales Tools Go High Tech
By Brent Felgner -- TWICE, 1/22/2007
NEW YORK — Circuit City is embracing high-tech sales tools, including wireless tablet PCs and in-store kiosks offering live video chats with firedog support staff, as part of its ongoing effort to redefine its role with its customers and reinforce its retail presence.
CEO Phil Schoonover highlighted the innovations during the National Retail Federation's (NRF) annual convention here last week. "Technology is the key enabler behind our multi-channel strategy," he said.
But at the same time, Schoonover said he wanted to "get a maintenance issue out of the way up front," as he explained that the volatile TV business and its pricing issues made it "very difficult to turn a respectable profit" in the third quarter.
Circuit City said it is on track in the current fiscal year to open 32 to 35 stores. In its third-quarter filing with the Securities and Exchange Commission, the company said it will open 60 to 65 superstores in fiscal 2008, including 15 to 20 store relocations, and will open 75 to 100 superstores in fiscal year 2009 in various sizes and locations. Published reports from the NRF meeting that the company is working on building upwards of 300 new stores over the next two years were inaccurate, a company spokesperson said.
In his presentation, Schoonover demonstrated the tablet PC with a store associate in a role-playing exercise that had the employee guide him through a consultative selling process. Turnover among Circuit City's employees, who are an average 23 years old, is at the industry average, which is to say it is very high, Schoonover said. These technologies will be an adjunct to their training.
"Circuit City's 46,000 associates are engaged in a multiyear effort to redefine our relationship with the customer and reinvent the Circuit City value proposition," he said. That will necessarily involve the company differentiating its offerings with high service levels and by bringing added value to the customer experience. But it also counts on customers being willing to pay for those services, Schoonover stated.
The tablet PC enabled the employee to trace an outline of the customer's room where an HDTV might be located, including outside lighting and the seating distance to the screen. Among other things, the process allowed for the employee to recommend specific screen sizes appropriate to the room as well as determine if it was better suited to an LCD or plasma screen.
The process allowed for the choices to be narrowed from several hundred SKUs down to about four units, in the demonstration. The employee also walked the customer through the selection of cables and other accessories, and mounting and installation options.
Schoonover referred to the tablet PCs and interactive kiosks as a "guided selling tool" that will help associates deliver a "consistent high-quality experience to share with our customers."
The live video kiosk similarly walks the customer through some of the more perplexing decisions surrounding a TV purchase with a member of Circuit City's firedog home installation staff doing the selling and consulting.
Schoonover called the kiosk "a truly shocking experience that's truly multichannel. I think of this as a way to take one truly knowledgeable associate and share [his] knowledge with tens of thousands of customers."
And he added, "We believe we can delight the customer and create sustainable growth despite the challenges all of us in this room face."
Schoonover said Circuit City is seeking to share in the estimated $50 billion growth in the CE industry over the next five years, mostly led by the transition from analog to digital TVs. Moreover, $20 billion will be generated by in-home and in-store services for PCs and home integration of IT and home theater technologies, he said.
Schoonover also predicted that $36 billion in CE sales will be generated from Web sales through 2011.
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