Can Circuit City come back from the dead?

Discussion
Photo: Wikipedia/Darthgriz98
Feb 15, 2018
Matthew Stern

When big box electronics was booming, Circuit City was one of the biggest retailers around. But the storefronts of the once-ubiquitous chain were all shuttered by the late ’00s and the brand name hasn’t even existed online since 2012. Now, after years of rumors about its impending return, Circuit City is relaunching — starting with e-commerce.

Circuit City CEO Ronny Shmoel announced in a press briefing at CES earlier this year that the retailer’s rebooted e-commerce presence would be set to launch on February 15, 2018, according to Twice. (The site was still displaying a “Coming Soon” announcement this morning.)

The company is also planning an eventual return to brick-and-mortar with kiosks, a store-within-a-store concept and eventually its own standalone showrooms. Circuit City has already contracted a company to create 8,000 to 10,000-square-foot experiential showrooms.

Mr. Shmoel purchased the Circuit City brand in October 2015, according to the Richmond Times Dispatch.

This is not the first time since then that the brand has been reportedly ready for a relaunch. In 2016, Mr. Shmoel announced both a prototype store in Dallas and an e-commerce site but, as reported in a separate Twice article, stopped short of going live in order to get the concept right.

But making a return to online and even brick-and-mortar electronics now might seem like a better proposition than it did two years ago. While big box electronics took a huge hit over the past decade, Best Buy, the last chain standing from the format’s heyday, has undergone a successful turnaround.

Best Buy had appeared to be winding down at the beginning of the decade. But thanks to moves like an increased focus on smart home solutions, services and store-within-a-store relationships with major vendors like Samsung, the chain’s brick-and-mortar business has picked up.

As of January, CNBC was reporting that Best Buy’s shares were up around 70 percent in the last 12 months. The article states that Best Buy has demonstrated that there “may still be a place for an in-store experience with electronics.” 

Editor’s Note: On February 16, the day after this story ran, Twice reported that the February 15th Circuit City website launch had been delayed due to an unexpected deluge of pre-launch traffic.

DISCUSSION QUESTIONS: Can Circuit City make a successful return from the grave to compete with the likes of Best Buy and Amazon.com? Does beginning with e-commerce and then moving to kiosks, stores-within-a-store and showrooms seem like a sound strategy towards pursuing a comeback for the retailer?

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Braintrust
"Circuit City's successful return is now or never."
"I say some of the dead should be allowed to rest in peace — for eternity."
"The good news about Circuit City is that it has a recognizable brand. The bad news is that it is reentering the market against formidable competition."

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27 Comments on "Can Circuit City come back from the dead?"


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Mark Ryski
BrainTrust

Just what the world needs, another place to buy a TV. The Circuit City brand is essentially forgotten and unless new ownership has a truly new value proposition, then I would not bet a nickel on their success. Sure Best Buy’s results have improved, but showing progress against poor historical results is not comforting … and let’s not forget HHGregg. This was a tough category when Circuit City was alive — and it’s gotten a lot tougher since they departed.

Paula Rosenblum
BrainTrust

Exactly

Kenneth Leung
BrainTrust

I don’t see the value of the Circuit City brand in an online world. Best Buy managed to recover with some sharp management moves. I am not sure putting up a web site and a store with the Circuit City brand adds anything without some significant differentiation to sell consumer electronics.

Ed Rosenbaum
BrainTrust

I agree. What can Circuit City do now, many years after the name has been all but forgotten, that is not already being done? Yes, Best Buy has been doing better. But HHGregg certainly was a bust in this category after a fast start. Sorry to say it; but I think the investors might have a better place to put their money.

Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader
3 years 1 month ago

Completely agree. In fact, Mark, your comment may break the record for most thumbs up by the time the day is done! Circuit City had many problems as a retailer that led to their demise, and unless new management has a completely new approach and only shares the name, it’s not likely to succeed. Honestly, the name doesn’t even carry fond memories for most people that still remember them so I wouldn’t even say there is an inherent brand value at stake either.

Max Goldberg
Guest

Circuit City can be successful if it can provide products and an experience that differentiate it from its competitors. Consumer electronics has become a commodity category, with Best Buy and Amazon entrenched as market leaders. What will Circuit City offer that the others don’t?

Gene Detroyer
BrainTrust

Exactly. What will Circuit City offer that the others don’t?

Mark Heckman
BrainTrust

The recent sudden death of HHGregg, an electronic appliance retailer that actually acquired many of the old Circuit City stores just before its demise, does not bode well for forecasting success for this new version of Circuit City. However if this new version is better balanced between online and brick-and-mortar and does a better job of product mix, pricing and service, there is always an opportunity for a new player.

Invariably the key to success will be a mix of all of these issues, but also being able to showcase enough inventory in-store to promote variety and selection, while being prudent with inventory expense. Linking in-store to online in terms of kiosks and picking up and a whole host of omnichannel offerings will also be critical for bringing Circuit City back among the living.

Cathy Hotka
BrainTrust

This hugely difficult category is driven by price … but could be disrupted by service. Without compelling evidence, consumers aren’t going to think that Circuit City is the right company to provide that service.

Art Suriano
Guest

Yes, I believe Circuit City could make a go of it provided they built a business for today and not one of yesteryear. The big box consumer electronics store is something not much in demand anymore which is why I like the store-within-a-store concept for them. I would look at Macy’s as an opportunity for a partnership and competitive advantage for both.

J.C. Penney has brought back appliances and if Macy’s had Circuit City stores inside their stores that could give them a competitive edge without the massive investment of doing it themselves. For Circuit City, they would be able to feed off of Macy’s floor traffic. Work out a deal for Macy’s credit card holders to be able to use their Macy’s card for Circuit City purchases, and you have another win.

Harley Feldman
BrainTrust

The good news about Circuit City is that it has a recognizable brand. The bad news is that it is reentering the market against formidable competition and consumers that are more demanding than in the past. The quickest way back is through an online approach like they are attempting. However, they will soon need stores that create a brand presence and where the consumer can get help with the ever-increasing array of technology products and the complexity that comes with choosing and installing them.

Best Buy has been able to offer help and support to their customers with the Geek Squad and the store-within-a-store experts. It will take some time for Circuit City to achieve the Best Buy level of support. The Circuit City strategy is a good one, but if they can accomplish it with the resources they have remains an open question.

Gene Detroyer
BrainTrust

I’m not sure Circuit City is a terribly recognizable brand, its been 10 years departed. For those who recognize it, it certainly doesn’t carry positive halo.

Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader
3 years 1 month ago

Exactly. Even if the shopping experience (either online or in-store) is truly differentiated, most consumers that remember the brand will not be tempted to try it given their past experience.

Kim Garretson
Guest

I used to work at Best Buy in strategy and innovation, and one of our best moves was the launch of private label goods like Insignia. Not only did these items deliver more margin, they increased staff pride in our brands, and they put pressure on vendors on their pricing and innovation. I am wondering if the Circuit City has private label plans. Also another former BBYer lists the following at Quora.com as key factors in Best Buy’s success:

  • Decreased dependance on product margins;
  • Understanding customers;
  • Admitting its mistakes before it’s too late;
  • Last man standing.
Camille P. Schuster, PhD.
BrainTrust

This was a surprise. Best Buy was hit hard with showrooming and had to learn to compete in a new marketplace. Electronics products are complicated and consumers need questions answered. With only an online program, how will consumers get their questions answered? By going to a competitor’s store. If the competitor does price matching Circuit City has no advantage. What will Circuit City offer to entice consumers to purchase electronics when consumers know the company could easily exit the market (especially if the are only online) and leave them with warranties that won’t be honored?

Neil Saunders
BrainTrust

Good luck to Shmoel. With the wafer-thin margins in electricals, the extensive competition and the relatively slow growth, he’s sure gonna need it!

Chris Petersen, PhD.
Guest

Circuit City’s successful return is now or never. The first tipping point is the rapid demise of Sears. A lot of consumer electronics business will be up for grabs. Customers not only want devices, they want services and maintenance. Best Buy has capitalized on services and is poised to greatly benefit from Sears’ demise. Circuit City can’t just sell products, it must have a way to tap into profitable services, which also greatly aid customer retention.

Circuit City must be able to capitalize on selling major appliances. Yes, Amazon sells them and even sells Sears’ Kenmore brand. But big appliances are bulky, and many customers don’t have the means to install them or haul the old ones away. Major appliances is also one of the very few electronics categories that have maintained high margins and price points.

If Circuit City is to pull off a Phoenix, it must transform to doing what it wasn’t doing when it fell into bankruptcy.

Shep Hyken
BrainTrust

Circuit City was a good concept. It just couldn’t adapt to the changing retail world. No doubt online and Amazon had a lot to do with their demise. Yes, I think they can come back. Their brand still has some recognition. They have had a chance to watch and learn about the new retail landscape. And if they really want to “go to school,” they should study Best Buy. There was a time you could describe the “corporate medical condition” of Best Buy as on life-support. They came back and are doing well. It takes a combination of online, on-site, a great CX and more. The sequel to Circuit City story will be interesting. The potential success will be a great lesson to all in retail.

Dick Seesel
BrainTrust

This reminds me of the Linens-N-Things saga, in which the brand survives as an e-commerce site but its physical stores are long gone. There simply wasn’t the need for two similar big box concepts, so Bed Bath & Beyond turned out to be the survivor. (But the BBBY stock price has fallen sharply in the past five years, like many retailers, as it faces increased competition from Amazon and others.)

It’s hard to see what value Circuit City brings to the table at this point — except as a web-only play. Does a small-footprint “experiential” store offer something different from Best Buy or Apple? (Especially now that Best Buy is removing CDs from its physical stores, it’s easy to see that they will roll out more engaging and productive uses of that space.)

The Circuit City brand was already “damaged goods” because of bad decisions they made to reduce customer service and in-store expertise.

Lyle Bunn (Ph.D. Hon)
Guest

Electronics are not going away and the need for expertise is ever-increasing. Where retail has led with product supply, Circuit City leading with services related to data and file management, interoperability, end of device life planning/transition, product selection, software expertise and problem solving/break fix would address consumer pain points, of which lower cost purchase pricing is not one. Doing good by electronics users will do good by Circuit City.

Ryan Mathews
BrainTrust

What’s the compelling value proposition?

Where is the brand equity?

What are they going to be able to do that isn’t already being done … and well?

Until and unless these questions are answered I’m not sure I understand whether or not the “strategy” has any possibility of succeeding. If it doesn’t work online, how will it ever migrate back to brick-and-mortar?

I say some of the dead should be allowed to rest in peace — for eternity.

Doug Garnett
BrainTrust
Doug Garnett
President, Protonik
3 years 1 month ago

I wouldn’t call this “Circuit City returns.” The question is whether an entirely new operation (online and some type of store) can make a go of it using the old Circuit City name. And there are parts to the answer.

Yes, there’s always room in the market for an innovative new retailer — even in electronics.

No, I’m skeptical about a “start online” strategy given what we know about bad online economics — and they’re even worse for electronics.

Meh. Will the Circuit City brand be an advantage or liability? Personally I was left with a strong vision of Circuit City from its seedy, ill-stocked stores at the end.

Because the brand was once strong doesn’t mean it can be a strong asset today. Just look at how long it has taken the purchasers of the Sharper Image brand to make anything of the asset they bought.

Dave Bruno
BrainTrust

Finding differentiation on something besides price — which they have no chance of doing versus Best Buy and Amazon — seems like an extremely difficult proposition. I am wondering if the phrase “experiential showrooms” is a potential clue that they will try to differentiate on experience, but that better be some experience. Samsung 837 has created a great experience in the NYC showroom, but that is neither scalable nor repeatable as a model for typical stores. I have many doubts….

Craig Sundstrom
Guest

Short answer: No.

Longer Answer: He## No!

Essay Answer: Why would anyone in their right mind think that trying to revive a brand that failed when it had the stars aligned in its favor would make sense now when said stars are anything but?

As I said when this question, or one like it, was asked before: let the dead bury their dead … and let’s keep them interred.

Rebecca Fitts
Guest

I’ll come at this from a little bit of a different direction. From a retail real estate strategy it makes sense — much smaller footprints/overhead/rent. And if they can find high traffic areas without competition they could make some headway. Also, they should look at models such as b8ta and Enjoy as well as Best Buy.

Ricardo Belmar
BrainTrust
Ricardo Belmar
Retail Transformation Thought Leader
3 years 1 month ago
There are bound to be comparisons with Best Buy. They have two main things going for them: 1) Successfully recognized what showrooming was doing to them and they adapted accordingly with increased expertise, experiences, and services. 2) Last man standing. As each competitive store brand left the market, Best Buy gained customers who ultimately stayed with them because of the experience. For Circuit City, I see a few doubts: 1) Brand equity – many people do not remember them fondly and quite the contrary, did not have enjoyable experiences with Circuit City. 2) They can’t compete on price alone so what is the differentiated value proposition to the consumer? 3) Consumers want more than product in this category – service is a major part of the purchase puzzle. What will they offer here? 4) What is the merchandise mix? Consumer electronics has grown as a category since they left the market. Will they sell appliances? Or focus on products like TVs, home theater, smart speakers, and other small electronics. Will they sell mobile devices? The… Read more »
Allison McGuire
BrainTrust

I suppose there is value in re-launching a company that has brand name recognition, but not when it’s associated with a failed retailer. It won’t be easy to pry people away from Amazon or Best Buy unless they add features like virtual reality and a community of experts. There is value to an in-store experience also, where customers can talk to an associate, ask questions and weigh their options. Many people still value the interaction, but it needs a new twist. With the info I’ve seen thus far, I’m not feeling too optimistic.

wpDiscuz
Braintrust
"Circuit City's successful return is now or never."
"I say some of the dead should be allowed to rest in peace — for eternity."
"The good news about Circuit City is that it has a recognizable brand. The bad news is that it is reentering the market against formidable competition."

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