The resuscitated big-box electronics retailer Circuit City, expected to open its first prototype store as early as this month, is slowing those plans and "taking our time to get this right," CEO Ronny Shmoel said in a statement released to Twice.
Shmoel and fellow retail veteran Albert Liniado in January surprised many with the news that they aim to bring Circuit City back from the dead, with plans for brick-and-mortar stores in Dallas and beyond. Shmoel tells Twice that the company is going slow to ensure that the brand, its stores and its e-commerce site are ready for prime time.
Shmoel adds that based on industry enthusiasm for Circuit City's return, the retailer will increase the size of its prototype store to 6,000 to 9,000 square feet. "We are being careful with the design and layout and technology of the store to make sure it gives customers the experience they want to see in retail today, and is more scalable for future growth," Shmoel notes.
Circuit City at one time operated 1,520 stores across the U.S. and Canada. But lot has changed in consumer electronics retail since the chain filed Chapter 11 bankruptcy in late 2008, felled by declining spending on electronics, low sales associate wages, out-of-date stores in unenviable locations, and intense competition from now-struggling Best Buy.
Circuit City's new management thinks it can conquer the struggling electronics market. Shmoel told Twice in January that he’s studied the mistakes and success of other chains (presumably including Best Buy) and that he aims to take advantage of Circuit City’s enduring brand identity.
But the new landscape now also includes Amazon, which accounted for a whopping 90% of the $5.6 billion growth in consumer electronics sales posted nationwide in 2015, according to a note from Deutsche Bank analysts issued Tuesday. Five years ago, Amazon had 6.2% share and ranked No. 4 on the list of top 100 U.S. electronics retailers; today, it's No. 2 with 17.0% share, jumping ahead of Wal-Mart, according to Barron’s.
The success of Amazon, and the troubles of Best Buy and retailers like Target and Wal-Mart (who've cited muted electronics sales in quarterly reports), reflect the problems retailers face when they sell goods that are essentially commodities—items that can be found at several retailers, leaving consumers to decide where to buy solely on price.
That means differentiation is key and customer service options like home delivery and tech support are essential, though it’s not clear that even those can slow Amazon’s rise or boost sales that much for other retailers.
For now, Circuit City plans to work with Amazon, and not just compete with it, whenever it formally relaunches.“In the meantime, we are actively working on our website, Circuitcity.com, and launching on marketplaces, [so] you will now be able to see Circuit City live on Amazon’s platform,” Shmoel told Twice. “No one is more excited to see Circuit City come back than us. I could have just opened up a retail store quickly, but that is not fair to our future customers or the legacy that follows Circuit City. This will be a carefully thought-out and well-executed business model and that takes time to fully develop.”