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Getting a Second Life

BY CSA STAFF

The three-dimensional digital online world called Second Life may have initially attracted a Gen Y crowd, but as more retailers set up shop on the virtual landscape, member demographics are expanding. This is good news for Circuit City Stores, Richmond, Va., which is successfully using Second Life as its newest retail channel.

Circuit City, a specialty retailer of consumer electronics, home-office products, entertainment software and related services, operates more than 640 stores across the United States, as well as two Web sites, www.circuitcity.com and www.firedog.com. (There is also an international segment that sells private-label and brand-name consumer electronics products in Canada.) In a move to expand its multichannel strategy, the electronics company made its way onto Second Life last December.

Second Life members, who navigate the digital world’s experience as anime-style avatars, can enter a virtual Circuit City store, then browse and purchase merchandise no differently than they would at a physical store.

“We noticed that Second Life is an interactive testing ground that will let us learn more about the next-generation Web,” William E. McCorey Jr., senior VP/CIO, said at the recent ERI eXchange. He spoke during the keynote, “The Strategy for Outsourcing for Innovation and Change.”

With more than 8 million members navigating and spending money across the virtual world’s real estate (called islands), Circuit City saw an opportunity to spur its online sales. It was also an appealing opportunity as Second Life’s core-audience demographics continue to shift.

“While it is known for its appeal among Gen Yers, interest is growing,” he said. “We are seeing that approximately 60% of Second Life users are men, and the average age of a member is 42 years old. That is Circuit City’s sweet spot.”

Armonk, N.Y.-based IBM, a key partner in Circuit City’s business transformation and information technology upgrade initiative, helped the specialty retailer create its Second Life presence.

“Consumers can shop Second Life’s Circuit City the same as on our Web site, and even pick up orders at their local stores,” he said. “The positive feedback we have received is pushing us to open new Second Life stores as well.”

McCorey declined to reveal results, but he did say that the project is a direct correlation of the chain’s mission: “To deliver solutions that will propel growth and innovation.”

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Winn-Dixie team honored for turnaround

BY CSA STAFF

JACKSONVILLE, Fla. The team that lead Winn-Dixie Stores’ successful turnaround initiative is being honored by the Turnaround Management Association for the best ‘Mega Company Turnaround’ for 2007. Comprised of financial experts from The Blackstone Group, Skadden, Arps, Slate, Meagher & Flom and Smith Hulsey & Busey, the team helped Winn-Dixie regain the market share and profits it started to lose in the mid 1990s and early 2000s to competitors Publix and Wal-Mart.

Winn-Dixie filed for Chapter 11 bankruptcy in early 2005 after reporting  year-to-date losses of $552.8 million or $3.93 per share of common stock and a decline of 4.9% in identical-store sales in its second fiscal quarter over the same period in 2004.

 

Despite the difficulty of achieving a succesful turnaround, Winn-Dixie began its reorganization effort, while still continuing to operate its core business and preserving jobs. According to the Turnaround Management Association, it created new common stock for five classes of unsecured creditors, with recoveries ranging from about 96% to 53%. The company emerged from bankruptcy on Nov. 21, 2006.

For its fiscal year ended June 27, Winn-Dixie reported adjusted EBITDA of  $85.9 million compared to a loss of $27.8 million last year and an identical-store sales increase of 1.6% 

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Sears ends deal with maternity retailer

BY CSA STAFF

PHILADELPHIA Sears and Mothers Work, the world’s leading maternity apparel retailer, will not be renewing their agreement, Mothers Work announced today. Under their current agreement, Mothers Works operates the maternity apparel department in 502 Sears stores through the sale of its Two Hearts Maternity branded merchandise.

Mothers Work said it expects its partnership with Sears to end on June 20, 2008, when it current deal with the company is expected to expire.

Rebecca Matthias, president and ceo of Mothers Work, noted, “While we are disappointed about the end of our relationship with Sears, we feel the decision not to proceed with a renewal is in the best interest of our stockholders since we were unable to reach terms on a renewal which would be favorable for Mothers Work and our stockholders. “

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