Circuit City Liquidation Could Spawn More Bad News
It appeared there may have been a glimmer of hope for Circuit City as it tried to emerge from Chapter 11. But as I reported for Multichannel Merchant on Friday, the Richmond, VA-based big box and online electronics retailer is liquidating.
Vulturous consumers were slamming Circuit City stores for 30%-off sales starting on Saturday morning, and that’s not good news for anyone that considered itself to be in competition with that merchant. I’m not just talking Best Buy, but Crutchfield and even Walmart and Target. At least in the short-term, and with the economy getting worse and worse by the minute, short-term is about all the time most retailers have to turn business around.
Over the past week I had the opportunity to talk with representatives from Best Buy and Crutchfield, and they were very concerned with whatever action Circuit City was going to take. And if that meant liquidation, it meant a new – albeit temporary – level of competition that would suck into their sales for the first quarter of 2009.
Think about it now: The Super Bowl is in two weeks, and that’s traditionally been a huge time for television sales – and more so since the LCD and plasma revolution hit the United States. If the consumer has the opportunity to buy a 52″ screen for 30% less at Circuit City than at another retailer (and has the disposable income to make the purchase), where is that consumer going to go?
Sure, Best Buy will still have its Geek Squad available to hook that bad bow up for you, and Crutchfield will be able to walk you through step-by-step installation, but consumers are thinking bargains right now.
Even if Circuit City runs out of high-tech gear quickly, it’s not like consumers are going to run to Best Buy to get a second television, laptop, or stereo system. Maybe if a consumer had his or her heart set on coming home with a 52″ screen, and they are sold out at Circuit City, he or she goes to Walmart for the lowest price.
An aside here: We know Circuit City is a victim of the economy, but one author/blogger is trying to remind the public that this is as much a customer service issue as anything else. Here’s a link to Scott McKain’s BusinessWire press release. I’m including it for two reasons: The first is I Googled the guy and I haven’t seen him quoted anywhere yet regarding the Circuit City liquidation, so I figure I’ll let him get some sort of return on that investment. And the second is McKain is right.
Circuit City alienated a huge cult of loyal customers when they went for best-price over customer experience. And keeping that customer experience on the front burner was a huge theme last week at the National Retail Federation’s annual convention.
