Circuit City To Liquidate

Working closely with CE Retailers, I heard a rumor today that Ricardo Salinas Pliego had an offer of $350 million on the table to buy Circuit City's operations in the North East portion of the United States (many of these stores were profitable) but creditors wouldn't allow the transaction. Any chance he picks up the Circuit City name and the leases to select stores and starts from scratch in this region? If anyone has any ideas or comments please share.

Well there you have it. Another CE retailer gone from
the marketplace. Consumers will only lose out on this
situation. The less you have competition the more you
will pay and the less selection you have. Some will
say that on-line sales will fill the gap. If so many
are buying on-line then who is coming into Best Buy and
the like? It surprises me that people will spend
several thousands of dollars on a flat panel without
even seeing it in the flesh. The MFG. will also be
hurt by this since those left in the CE marketplace
cannot carry every brand and model. It used to be that
the MFG. and the retailers worked together. Now they
don't and see what is happening. All I can say to Best
Buy and the independents left is, don't get to
comfortable the storm has just begun.

Although it is always unfortunate to see a company close, this one could be an industry changer in a few ways. With Wal-Mart becoming more a player in LCD and HTIB product, it is likely that more stand alone CE retailers will fold. The manufacturers just lost a major outlet for a large volume of televisions. Combine that with the current economic mess and you have all the reason in the world for the manufacturers to cut prices more, as well as put better product on the shelves of stores like Wal-Mart and Target.
The current economic quagmire will ramp up some more failures. Sales of high dollar items as "fun" purchases will be seriously impacted even beyond any recovery. That bodes well for the product mixes at places like Wal-Mart, Sams, Target and other "low-priced" outlets. On the other hand, that bodes ill for the Ultimate Electronics, American TVs, H.H. Greggs and other specialty retailers that depend on those higher end televisions to be part of a higher end home theater which hopefully will be fat with furniture, warranty, accessories and home installation. I would venture that many of those companies are on the hook for a mix of product that won''t be competitive with the discount stores that focus on volume and have shown a commitment to lower prices.
At some point the manufacturers will open up more product to the discount retailers because they have factories to keep running. The manufacutures have built a lot of capacity into the CE industry and by nature, that is going to create pressure for low prices and low margins. If your company can’t survive on low margines, volume and low prices, get in line with the liquidators. On top of that, it will be some time before the economy gets well enough to support the free spending and credit gobbling American. I would suggest a few more retailers might evaporate if they to try to stay the course. Especially if they try to compete with commission based sales floors .
Circuit City''s demise was at least colorful and I think illustrative of the bumbling at the investor and management level. The only question remains is "who is next"? From my perspective, there is a ways for companies to survive and compete going forward, but you can''t be lazy and wait till the truck is going to run you over. I wonder just how many CE companies shifted their buying to reflect an impacted economy and tighter credit last summer? There was plenty of information available a year ago to suggest a shift in the economy to the downside yet surveys of the stores in my area seem to indicate they pushed into Christmas as usual!
Now that I think about it, few of these companies folded because there were no customers.
J. Wood
Formerly either a manager or sales with:
Pacific Stereo (CA) RIP
Handy Andy (CA) RIP
Federated Group Electronics (CA) RIP
Good Guys (CA) RIP
Leader Marketing (TX) RIP Convention Hall CE Sales
Ultimate Electronics (CO) Soon?

Predicting this event would be like predicting which direction the sun will rise tomorrow! (LOL) Sadly though, this is no laughing matter, as thousands more people will be out of work, AND, the blue and yellow Nazis of retail will become even more powerful. I feel sorry for the CE vendors of this world, who will wish they didn't have to deal with the blue and yellow retail Nazis, yet, they will be the only national CE retailer left now. As much as some people here may not have liked Circuit City, for whatever reason, they at least provided a level of competition (nationally) that no other CE retailer could (nationally). Now it will be up to the regional CE retailers to step up and fill the void left by Circuit City. I certainly hope they do!

Actually, this may be decent news for the smaller independents and dedicated CI guys/gals. With one more price slasher out of the way and not mucking up the field with bad installs and worse information about CI, the CEDIA type local storefront should be able to pick up more market share. I do feel for the 30k people without jobs - many of whom are so poorly trained that they really can't work for a CEDIA type place.