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Northeast Heats Up As Retailers Fill A Void

4/19/2010 12:01:00 AM Eastern
NEW YORK — The Northeast is shaping up to be the newest retail battleground as independent dealers — including Ultimate Electronics and a re-merchandised Sixth Avenue Electronics — vie for a piece of that abandoned market.

The liquidation of Circuit City, the departure of Tweeter from its New England and Pennsylvania strongholds, and the bankruptcy in February of Connecticut- based Bernie’s, has left a specialty store void that has not gone unnoticed by chains both near and far.

Laying the groundwork for a coming turf war are recent expansions by hhgregg, P.C. Richard & Son, Sixth Avenue, Paul’s TV and, most recently, Ultimate. What’s at stake, according to estimates by The NPD Group, is the 33 percent of Circuit City sales volume left unclaimed by Best Buy and Walmart, on top of any remaining market share that was abdicated by Bernie’s and Tweeter.

Much of the contention will be centered in the greater Philadelphia area, where New Jersey-based Sixth Avenue opened two stores last year, New York metro-area powerhouse P.C. Richard will open two this year, and Indianapolis’ hhgregg is entering Eastern Pennsylvania and nearby Atlantic City, N.J., this spring as part of its 45-store Mid-Atlantic build-out.

Facilitating the expansions is a surfeit of empty Circuit City storefronts, which suits the big-box footprint of P.C. Richard and hhgregg. Those two chains, which feature commissioned sales floors and a similar mix of mid- to higher-end CE and majaps, are the most likely to come to direct blows, although Sixth Avenue has also entered the fray by adding white goods to its mix and stepping up to larger 35,000- to 40,000- square-foot stores.

According to Sixth Avenue operations VP Tom Galanis, the decision to introduce appliances (under former Best Buy merchant Tom Cook), as well as dedicated PC and gaming departments, was prompted by customer demand, rather than any competitive considerations. “We don’t react to others,” he told TWICE. “This is a free country built on competition, and everybody’s welcome to compete. We just stay focused on our customers.”

P.C. Richard president Gregg Richard similarly told TWICE in a recent interview, “We welcome new competitors into the most difficult market in the country, where we have a loyal customer base. We have dealt with competitors all our lives,” including former New York metro-area leaders Brick Church, Crazy Eddie, Newmark & Lewis, The Wiz, Tops Appliance and Trader Horn. “We’ve seen ’em come and go.”

Dealers will soon be butting heads in New England as well. P.C. Richard, which opened its first Connecticut store last spring, plans to have as many as six locations in the Constitution State by year’s end, and is eyeing Rhode Island and Massachusetts. Paul’s TV, the Los Angeles-area specialty A/V dealer, already established itself in the market by opening CE shops within four Jordan’s Furniture showrooms in Massachusetts and New Hampshire.

Also getting into the fray is Ultimate Electronics, the Colorado-based A/V chain that was brought out of bankruptcy in 2005 by investor Mark Wattles. The 34-store specialty retailer opened its first East Coast location in Leominster, Mass., last month, and reportedly plans to open its first New York state store by June.

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