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Ultimate’s Thin Margin For Error

2/09/2011 12:35:00 PM

By the time my print issue of the Feb. 7 issue of TWICE hit my desk that morning, my editorial on p. 3 was already dated.

In it, if you recall, I wrote that it would “be challenging — but not impossible — for Ultimate Electronics to emerge from Chapter 11.”

Well, when GE Capital wants its money, it is impossible to emerge from Chapter 11. That’s a lesson that Ultimate and many other CE retailers have learned over the years.

Sure, GE Capital could have waited for its money, but that wasn’t the problem. The economy hurt Ultimate, no question, but if the chain wanted to expand, couldn’t they have done it in the Northwest near the rest of its stores vs. putting stores in the Northeast?

As for the Talkbacks on our original story about this being the demise of all brick-and-mortar retailers in CE, I respectfully don’t agree.

But I will say that given the competitive changes in the industry during this decade, and the economy of the past three years that is still in a slog, the margin for error in terms of CE retailers is very, very thin — thinner than the margins many regional and independent CE retailers live with today to make a living.

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