Circuit City Targets Home Theater Installs
“Critical to our long-term strategy,” says Schoonover; R&D dollars flowing
By Alan Wolf -- TWICE, 4/24/2006
Richmond, Va. — Circuit City said it will unveil later this year a strategy for offering affordably priced home theater installation services that will launch during the second half.
“We will aggressively grow our home theater capabilities,” president/CEO Phil Schoonover said in a conference call reviewing the chain's financial performance (see p. 53), describing the high-margin category as “critical to our long-term strategy” and “a critical competency to build.”
The plan would feature a mix of Circuit City installers and third-party vendors, he said, with employees deployed in primary markets and outsourced providers serving secondary and tertiary markets.
The company will also introduce a new brand name for its service offering, which will debut in new and remodeled stores later this year.
The No. 2 CE chain is currently offering custom installation services in-house in 13 markets and contracts with third-party providers outside those areas, Schoonover noted. He said the company is also honing its home installation skills and labor model at its two laboratory stores in Boston and South Florida, and that the category represents one of the company's largest investments of R&D dollars.
Schoonover said that offering “high quality installation at affordable prices” is especially important as consumers move to DTV in advance of the analog cutoff.
The home installation strategy is separate and apart from Circuit City's PC services program, which presently functions under the brand name IQ Crew. Tech support is currently available in-store throughout the chain, and in-home services are offered in 20 markets. The company also offers an online remote IT service provided by a third party.
On other fronts, the Schoonover reported “significant improvements” in its vendor relations over the past 18 months, which will lead to better forecasting, in-stocks, inventory levels, promotions and margins. Doug Moore, executive VP and chief merchandising officer, conceded that in the past the company had been “woefully short on forecasting, buyer expertise and industry knowledge,” but is now regarded by vendors as “an important partner.”
Moore also indicated that Circuit City would not pursue a private label strategy in “rapidly evolving” categories. “It doesn't always make sense to direct source,” he said. “It's risky for high-tech products.”
Elsewhere, the company has selected over 30 sites for new stores which, pending approval, will begin opening over the next two to three years. In the meantime, the company will “refresh” the exterior and interiors of existing stores with consistent visual merchandising, improved adjacencies, better lighting, and new space allocations, based on some 200 ongoing “experiments” at the laboratory stores.
The company also continues to make improvements in its retail point-of-sale and merchandising systems, and is more efficiently managing product transitions, Schoonover said.
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