Austin360 blogs > Digital Savant > Archives > 2008 > November > 10 > Entry
Circuit City files for bankruptcy; now what?
This morning brought word that Circuit City, the nation’s second-largest electronic retailer, has filed for Chapter 11 bankruptcy protection.
It’s a sad day if you have an abiding love for carpet-walled demo rooms that house thumping car stereo arrays or dark, cluttered aisles displaying of flat-screen TVs.
If I’m unsympathetic maybe it’s because I was never a regular shopper at Circuit City. (These days, I can barely muster up the enthusiasm to hit Best Buy, the nation’s biggest electronics chain.) It certainly wasn’t a surprise — just recently, the company announced it was closing 155 stores nationwide (including one in the Austin area).
It’s especially bad news this close to the holidays, but then the season certainly wouldn’t have saved the retailer. No one has any illusions that sales of giant-screen TVs, home theater equipment and computers are going to be down this year. It’s not the best time to be peddling goods that are, frankly, not necessary.
I can’t speak for the masses: maybe Circuit City is a great place to buy a new TV, or to get help installing a car stereo. But I know that in my own experience, the last time I made a major purchase at Circuit City, I paid for the item on the company’s Web site, walked into the store to pick up my merchandise and walked right out. The store’s shock and awe TV displays, walls of computer software and endless array of chargers and adapters holds no sway for me. If I’m looking for something very specific and very nerdy, I’ll make the drive way up north to Fry’s. If it’s something I don’t need right away, I order online from newegg.com, buy.com or Amazon.
The HDTV set that sits in my living room was purchased on Amazon. It was shipped free, I didn’t have to pay taxes and the television was set up for me at no extra charge. It was also priced a few hundred dollars lower than I would have found it at Circuit City or Best Buy. Why would I go back to retailers who often don’t have the item I’m looking for?
Best Buy seems to be succeeding with aggressive sales pricing, a more diverse array of products and, increasingly, exclusive CD and DVD bonus content. And, of course, Wal-Mart just prices things lower and can afford to with its mind boggling economies of scale.
What does it mean for electronic retailers? The Apple Store and smaller local retailers who have specialized customer service (A&B TV comes to mind) are the only places I can think of where buying electronics doesn’t feel a chore and where browsing doesn’t overwhelm the mind. The big stores often feel cluttered, disorganized and lacking in customer service reps who can offer solid buying advice or knowledge. I realize I’m a very demanding buyer, but I don’t think I’m the only gadget hound who feels this way.
I have a feeling that the giant retail store full of acres and acres of electronics is not long for this Earth. Remember CompUSA? That was another company that couldn’t leverage its sales of computers, TVs, video games and DVDs into serious competition against Best Buy, Wal-Mart and others. It now has only 23 stores nationwide.
Am I wrong? Do people have much more pleasant experiences at these stores than I do? If I have a choice and the pricing is comparable on an item, I often default to buying online to save the hassle, gas and time of going to a big-box store. Let me know your experiences in the comments. As for me, if Circuit City goes away completely, I won’t be mourning its loss.
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By Jon Simmons
November 10, 2008 3:55 PM | Link to this
Big Box stores are absolutely a dying breed; economies of scale will NOT survive the wildly fluctuating prices of gasoline, particularly Diesel fuels, particularly when the overall trend of prices is up, despite recent movements of gasoline below $60 a barrel. Once the economy heats up again, the price of oil will rise beyond $150 a barrel because of supply constraints. Everything comes back to energy supply and energy ROI: Return on investment. It used to take 1 barrel of oil to return 100 barrels of oil (back when it used to seep out of the ground). Now oil is at 20:1 and falling. This is a bad situation for anyone (big box stores included) that RELIES on cheap oil to power their price advantage. I won't miss them, and the jobs they provide can be sourced locally, by local businesses. Goodbye CC, Best Buy et al
By Prentiss Riddle
November 10, 2008 2:02 PM | Link to this
I couldn't agree more. I've thought for years that Circuit City and Best Buy were in a very un-sweet spot (bad prices, bad service, bad selection, bad store experience).
The electronics stores where I still go from time to time have to excel at one or more of those. Fry's is not much better than CC or BB in service or experience, but it's like the Central Market of electronics stores in its ridiculous abundance of choices, and Fry's loss leader prices beat even WalMart (my $30 no-name upright vacuum cleaner is Exhibit A).
On the experience side, the Apple Store is like a day spa for geeks, and quirky local shops like Discount Electronics on Anderson Lane are fun in the same serendipitous way that Uncommon Objects or Room Service Vintage are fun.
But big-box stores? Knock 'em down and plant trees to grow more cardboard for Amazon.