On March 8, Circuit City (Was CC on the New York Stock Exchange, now CCTYQ in the Over-The-Counter market) closed its 567 remaining U.S. stores. Part of Circuit City’s problem was low consumer spending due to the bad economy. But with these stores closed, there are still many customers looking for a new place to shop for electronics. So which stores will step up and earn their business? Two names stand out as the companies trying hardest. They are hhgregg and Systemax.
Indianapolis-based appliance and electronics store hhgregg (HGG) is making an effort to attract Circuit City consumers. First they accepted Circuit City gift cards, then they offered a discount of $50 off on purchases of $299 or more. Those offers have expired, but the company will still assist in establishing factory authorized service on manufacturer-warranted items that customers originally purchased from Circuit City. HHGregg is expanding, often into old Circuit City stores. It has 111 stores in Alabama, Indiana, Kentucky, Ohio, North Carolina, South Carolina, Tennessee and Georgia, and plans to reach 400 stores within 10 years.
Systemax Inc. (SYX) purchased the Circuit City brand and website on May 19, 2009. Systemax Inc. sells of computers and electronics, and been in has been in business since 1949. This company also took over CompUSA’s web site when they closed their stores, and is now opening new CompUSA stores. It could eventually open some new Circuit City stores as well, but there are no plans for that as of now.
Other nation wide stores shoppers may turn to are Amazon.com, Best Buy and Wal-Mart.
BestBuy (BBY) was Circuit City’s biggest competitor. It is widely expected to attract Circuit City customers, since it is the last nationwide big box chain known for being an electronics store. Same-store sales were down, but Best Buy opened 213 stores in the past year, and overall sales were up.
Wal-Mart (WMT) is the ultimate big box retailer, a general store which always benefits from bargain hunting shoppers displaced from more expensive stores. And Wal-Mart has been trying to expand their electronics business. Wal-Mart experimented with selling a low cost Linux computer called the gPC and now sell a wide range of computers.
Another option for the internet shopper is Amazon.com (AMZN), which started as an online bookstore and now sells many things that Circuit City once did. Consumers may not want to buy electronic appliances from them, but they also sell things that are easy to ship like CDs and DVDs. They also sell music as mp3 files, giving them an advantage in future media.
But not all consumers will want to be locked into one monopolistic nationwide chain or shop on the internet. Local stores may pick up some of the slack, and even grow into nationwide chains themselves. Conn’s and Fry’s Electronics are two medium sized chains to consider.
Conn’s (CONN) was founded 118 years ago as a plumbing company, and became a publicly traded company on November 25, 2003, when it sold 4 million shares in its Initial Public Offering. The company now has 69 stores in Texas, Louisiana, and Oklahoma. It sells appliances, electronics, lawn equipment, furniture, and computers.
Fry’s Electronics was started in 1985 by the Fry brothers, John, Randy, and Dave. The Fry brothers, who got their start at Fry’s Food Stores, still own the company. The chain has 34 stores in California, Oregon, Washington, Arizona, Nevada, Texas, Georgia, Illinois,
and Indiana. They sell computer software and components, CDs and DVDs, phones, cameras, car electronics, stereo equipment, and televisions. They also sell electronics tools and kits, and science toys. Their web site even has a Health & Beauty section, which sells
items like hair clippers and blood pressure monitors. And in a lesson from their food stores, each store also typically stocks a variety of snacks and other impulse items.