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Circuit City: The Gift That Keeps On Giving

3/27/2009 09:38:00 AM

Best Buy and Conn’s, the Texas-based electronics/appliance chain, both released their quarterly financials this week and, lo and behold, mentioned Circuit City’s demise.

Both said that while the now-departed chain’s liquidation sales impacted their businesses, over the long term they should benefit from the retailer’s departure.

Circuit City was also on the minds of buying group Brand Source, which had its spring meeting in Dallas earlier this week. Bob Lawrence, head of the group, and Jim Ristow, leader of its Home Entertainment Source CE operation, both said that the group is targeting a share of the former national chain’s business.

And, of course, not to be outdone, P.C. Richard & Son, the privately held New York-based electronics/appliance chain targeted Circuit City’s former customers and reminded them of its 99-year history with an ad in Thursday’s New York Daily News. (See picture.)

So, all things being equal, J.D. Power & Associates is right when it said that “national chains” (read Best Buy and Wal-Mart) will benefit by the end of Circuit City, but regional CE chains and independents will pick up much needed volume too. 

Circuit City, while it caused a problem with its liquidation sale, continues to be the gift that keeps on giving to CE retailers as its market share is now clearly up for grabs. 

And the undercurrent of comments from retailers at the Nationwide Marketing Group and Brand Source meetings this month to TWICE from retailers in general show that retail sales, while not booming, may have turned the corner. (Bits of some positive economic news haven’t hurt either.)

 But we aren’t out of the woods yet. Job creation is the last thing that comes back in a recession. And March 31 is the end of the fiscal year for key Asian CE suppliers. April will be critical to see if their situation is as bad as they have predicted … or hopefully not worse.
 

One anonymous retailer TWICE spoke to this week said that “business is fine … we’re just worried about our suppliers.” Yes, the industry may be in an interesting situation where retailers may be healthier than many suppliers during this calendar year. If the economy gradually improves in the months ahead by the fourth quarter there could, dare I say it, be product shortages due to manufacturing cuts made over the past few month.

 

Is that mere speculation? I’d like to call it a calculated guess. It is possible given the decisions made over the past few months, the marketplace and the demise of Circuit City, as well as Tweeter’s departure.

 

Of course, it’s only the end of March, and there will be plenty of twists and turns in the electronics/appliance industry by the time we reach the holiday selling season.

 

Recession or no recession, that fact of life in this business doesn’t change.

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