Turbulence is the topic du jour at retail these days. Between the bankruptcy filings by CompUSA and Linens ’N Things, and the arrival of new food concepts by Tesco, Safeway and Wal-Mart, just about every aspect of retailing is experiencing either a market shakeup or a veritable sea change.
And right up there atop the talk of turbulence is Circuit City, a company that has been searching for a purpose, identity and customer base ever since Alan McCullough moved out of the corner office back in March 2006. But now that Circuit City’s name is intermixed with talk of store closings, bankruptcy protection or even liquidation, the question is not when Circuit started its nosedive, or under who’s watch. The question is, ‘Who’s getting its market share and how does this slow, but steady, downfall of the nation’s No. 3 CE retailer affect the electronics market at large?’
The tendency at first might be to assume that Circuit’s slipping sales are migrating to other CE retailers, such as Tweeter, Harvey and RadioShack, to name a few. And certainly if you were to isolate the example of Best Buy, you’d see a vertical CE retailer that has grown handsomely over the last few years. In fact, the mis-steps of Circuit City seem to have been carried out over the last few years in near lockstep with the aggressive and, for the most part, successful strategic measures enacted by Best Buy.
But Best Buy, having taken on the scale and proportion of a market-moving machine, is bigbox retailing’s exception to just about every rule. Beyond the big blue, most others in the traditional CE sector aren’t quite as well off. CompUSA, once the nation’s No. 4 electronics and computer retailer, pulled the plug at the start of 2008 and began liquidation (see page 4 for related story on the rebirth of the CompUSA trade name). Tweeter, which emerged from bankruptcy last July, is now a fraction of its former self and struggling to find a viable niche in the market. Even RadioShack, whose efforts to be the corner store for the mobile electronics revolution have had only marginal success, eked out sales that barely exceeded those of 2002 levels.
And yet, the “CE sector” keeps growing rapidly. By the end of 2007, for example, CE sales in the United States had risen 10% over the previous year and consumer appetite for LCDs, iPods, cellphones and GPS devices seemed as insatiable as ever. So what gives?
There’s only one explanation for this apparent anomaly: The CE sector has turned into the poster child for channel blurring.
More than any sector in all of retailing, consumer electronics is now dominated by retailers outside of the traditional channel definition, with destinations like Wal-Mart, Target and Costco easily accounting for the lion’s share of growth. In fact, among the nation’s 20 largest retailers of consumer electronics, only five still qualify as traditional bricks-and-mortar electronics stores.
At the root of this market evolution is the fact that consumers are no longer channel loyal when it comes to their electronics and media purchases. At its extreme, this is exemplified every time a consumer logs onto iTunes and buys a single song for 99 cents. Yet even in the everyday consumption of electronics hardware, this phenomenon is seen every time a shopper subconsciously is forced to decide in which retailer’s parking lot he or she is going to stop the car. If I need a good, affordable, brand-name GPS device, where should I go? Increasingly, the answer is the warehouse club, supercenter, office superstore or simply online.
That a consumer would buy a GPS somewhere other than an electronics store is both humbling and ironic for a channel in search of direction.
Jewel-Osco reaches reusable bag milestone
MELROSE PARK, Ill. Supervalu-owned Jewel-Osco reported that it has sold more than 1 million reusable shopping bags.
Jewel-Osco began selling its green reusable shopping bags last August in all of its stores. Since then, the company has introduced a line of insulated blue bags designed to keep cold and hot products at temperature, as well as a few specialty printed reusable bags.
“We are seeing more and more people buying and using recyclable shopping bags,” said Keith Nielsen, president of Jewel-Osco. “This is likely due to the heightened awareness about the environment and the impact of plastic bags in landfills.”
Zigerelli named ceo of Duckwall-ALCO
ABILENE, Kan. Duckwall-ALCO Stores has named Lawrence Zigerelli president and ceo.
Prior to joining Duckwall-ALCO, Zigerelli served as president of Meijer, where he provided strategic direction to 75,000 employees in more than 170 stores and the corporate headquarters. His responsibilities encompassed all functional areas including planning and finance, product development, marketing, merchandising, sales, operations, human resources, real estate, e-commerce, logistics and information technology.