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Troubling Headlines Can Have A Silver Lining

This week’s news about Circuit City’s plans to close about 20 percent or 155 of its U.S. stores in 12 cities, coupled with last week’s report that the Tweeter chain has been sold to a liquidator, offer an indication of what the consumer electronics industry is up against going into the important holiday buying and gift-giving season. 

That said, in a New York Times article on Monday, Stan Glasgow, the president and COO of Sony Electronics, was quoted saying, “In past recessions, consumer electronics has fared rather well.  I believe we’ll sell more TVs than last year.”

And the Consumer Electronics Association is still forecasting respectable fourth-quarter business growth for the category overall of 3.5 percent over the same period a year ago.

The question remains, however, will the consumers come out in force?  Despite the difficult economic picture, there are still gifts to be given and received. There are still exciting new products being introduced.  There is still the Super Bowl following the holidays.  And there is still the opportunity for consumers to upgrade their television viewing experience to HD with the digital transition coming up in February.

In fact, a GfK Roper Report published just last month, titled Silver Lining: Insights and Opportunities in the Current Economic Downturn, found that 50 percent of online Americans plan to buy an HD or flat-panel television television within the next year (57 percent men, 44 percent women), with little difference expressed in this regard between those who are generally planning to reduce their overall spending and those who are not.

So if consumers come around, surely there will be retailers to pick up the slack, whether it is the nation’s largest CE retailer Best Buy, increasingly influential mass merchandisers like Wal-Mart and Target, or the club stores like Costco and Sam’s.  There are also the entrepreneurial independents and the growing wave of e-commerce merchants, not to mention in the case of Sony (and a few other vendors) our direct channel encompassing and Sony Style stores around the country.

But even with all these options, I believe it’s important for Circuit City under its new management to continue its efforts to remain a premiere player on the CE retail scene.  From both an industry and a consumer perspective, it’s beneficial to have a strong No. 2 specialty A/V retailer serving the U.S. market. Hopefully, with this week’s action behind it, Circuit’s management can now focus on enhancing its operations, providing an improved customer experience and offering more consumer choices in the marketplace.