The Demise of Circuit City, Is the Internet Really Taking Over?
By now we’ve all seen the news of the demise of Circuit City and Tweeter. In today’s economic conditions it’s common for even long-established businesses to fail. Circuit City started out 60 years ago as the Wards Company, changing its name to Circuit City in 1984. They closed down in the US in January, remaining open in Canada. Tweeter was not quite as old being established in 1972 and eventually growing to 100 stores before closing in December.
So is the poor economy really the culprit here? Or is it perhaps… the internet?
I have seen countless debates in online forums about the advantages of buying in a brick-and-mortar store versus a website. I certainly agree it’s important to see a television or listen to speakers and electronics before purchase. But how realistic is this?
There were three Circuit Citys near my home. Not one had a properly treated listening room. Not one had a suitable environment for judging the quality of a video display. And in my experience, not one could link me with a knowledgeable salesman who really knew anything about the products being sold there. I did purchase my first HDTV at a Circuit City. All of my electronics purchases since then have been online.
In all fairness to the good hi-fi shops out there; I’ve been in some great stores but the closest ones to me are over an hour away in New York City. It’s just not feasible for me to shop in an electronics store near my home. I, like many others, have spent thousands of hours researching products on the internet. Websites like Secrets provide an invaluable resource. Where else but the internet can one find so much information about electronics? No, I can’t listen to speakers on the internet or check out a TV on the internet but I couldn’t really do that at Circuit City either. So all that’s left is education. I couldn’t find that at Circuit City.
So my conclusion is this: Circuit City and Tweeter failed, at least in part, because they had nothing to offer versus the internet. They couldn’t educate the consumer. They couldn’t demonstrate products properly. And they couldn’t instill the confidence in a buyer that he was getting the most product for his money.
What do you think……..
Chris Eberle
March 3rd, 2009 at 7:23 am
The internet didn’t kill Circuit City. Circuit City killed Circuit City.
I worked at CC when they let go of high paid commissioned sales people, thus leaving only mediocre sales people. And the descent just accelerated at that point.
The idea was that customers were bettered educated due to the internet. Sure some customers where, but most customers don’t have the time to research stuff on the internet, thus leaving the need for a well informed salesfore.
CC is also the company that tried the terrible DIVX idea back in 97-98 to create a proprietary DVD format. It failed as it should have.
Best Buy seems to be doing just fine. Better costumer service.
March 3rd, 2009 at 7:38 am
The internet has already taken over. And the more the “high end” suppliers refuse to sell over the web, the worse for them. Speakers, for one, you must audition. But wake up and smell the roses B&W: Axiom and others are letting the buyer do exactly that, in their own homes, where they are going to be installed anyway. So yes, I believe the internet took over.
PS: I also believe the “high end” is being helped in its decline by TAS & Stereophile. I miss Audio magazine. But that is another story for another day.
March 3rd, 2009 at 2:47 pm
Chris:
When I go to Best Buy near my home, it is almost always very crowded and bustling with activity. A Circuit City store that was in my part of the city was more like a gohst town by comparison. My theory is that retail success is a combination of marketing, service, image, price, etc. Over the years, I bought a lot more music, DVD’s and components from Best Buy than from Circuit City. (BTW, we never had a Tweeter in San Antonio.) The main reason I would go to Best Buy is that their prices were lower and they had better promotions. Why spend $5 more on the Iron Man Blu-ray? It’s the same product wherever you get it. The same reasonong holds for a Blu-ray player, a TV or anything, really.
I also heard from a friend that the Circuit City CEO said that Circuit City never thought of Best Buy as their competition. This perplexes me. What was their competition? Certainly it wasn’t a high-end shop just like it wasn’t going to be Radio Shack, either. So I think their demise was a combination of poor pricing, ineffective marketing, an unclear strategy, along with internet discounters and the economy.
Jim
March 5th, 2009 at 11:24 am
I never have done any serious TV or audio shopping and comparison at Best Buy, Circuit City, or any stores of similar size when I want to do a serious evaluation of gear. In the Pacific Northwest, I would often find myself going to visit Magnolia HiFi, where you could find them performing a calibration on a TV that was just added to the store. They also had multiple listening rooms, and salespeople that were much smarter than someone you would find at CC or BB. Some Best Buy’s now have a Magnolia HiFi section in them that carry higher end gear, but I can’t tell you from experience how the display setup or salespeople are as I haven’t visited one myself.
However, almost all of my local HiFi dealers have nice listening rooms, and gear that I typically can’t purchase online. Most of them go out of their way to help me evaluate as many speakers or other equipment as I want, and some even provide the in-home loans that let you determine for certain if a product is going to work for you. However, for most mass market gear (and virtually all TV’s and projects fall into this category now it seems), the internet provides the exact same product as a big box retailer, and since most of my critical decision making is based on reviews where people can properly calibrate the display and evaluate it against other calibrated displays, I had no problem buying my last television online for a good discount based on the reviews of others. I took a look at it in the local Best Buy, but I couldn’t seriously review it there.
I think that a well run store that provides extra value for the customer (like Magnolia did for me, as I’ve purchased many things from them in the past) will find an audience, but since Best Buy, Circuit City, and Tweeter are mostly interchangeable to me, I am not surprised to see consolidation in that area.
March 5th, 2009 at 12:27 pm
Everything you listed as the reasons for the failure of Circuit City and Tweeter is true. However, in addition, rap music help kill the audio industry because it does not take accurate equipment to play back rap’s mostly synthetic sound. Since the younger generation adopted this music, the audio industry does not have a market to replace the baby boomers.
March 6th, 2009 at 12:52 pm
I think your conclusion is “spot on”.
March 10th, 2009 at 8:37 am
In past years CC was a much better establishment than Best Buy. It was more accessible, had better service, and surprisingly over the years they had some decent equipment resting on their shelves. CC is where I bought my first THX certified receiver (back when Kenwood turned out a few decent items here and there) and subsequently purchased a couple of very fine Carver amps.
I think a couple of things killed CC. First, the internet is definitely hurting the B&M stores. There’s just no way around it. I admired CC’s effort to make use of the internet. I liked that I could browse their inventory online and choose delivery or a quick in-store pickup. Each time the item was there waiting for me and it allowed me to circumvent those employees who are hounded to pester the customer into signing up for service contracts. But to me this also hurt CC in a significant way because all too often their in-store prices and internet prices didn’t match. Sometime the better deal with them was online. Other times the in-store price was better. And it was frustrating dealing with them in the store because in the beginning they just would not honor the online price unless you ordered on the internet yourself. All of this was happening during the time when much better deals could be had online from sellers all over the country. CC just didn’t seem to get it.
They also make a mistake with their credit programs. It used to be that in the past you could walk in and buy a big ticket item and ask for 12 months or more interest free. They had a period of time where they wouldn’t offer it and wouldn’t budge on it. I simply went to Best Buy and get the deal, including credit the credit terms I wanted.
The other thing that hurt them (and others) was the advent of HDTV. TVs have really taken over the marketplace. We’ve all seen electronics stores devote more and more space to these TVs, which in turn means less and less space for everything else. Audio became unimportant and with it everything else related to audio. Now it wouldn’t have been so bad for them if they could have sold all the TVs they devoted space to, but the appeal of the money to be made off the TVs encouraged warehouse stores, K-mart, Sears, Walmart, you name it, to come in and compete to get their share of the dollar. When your business is relying so heavily on TVs and the market is so diluted with competition coming from all angles it’s hard to make buck unless you can offer something special. CC just didn’t offer anything special.
I think Best Buy will fold too. They set themselves up to build a store within walking distance of every CC. Even in the heat of competition Best Buy never really cared about customer service. Now that their major competitor is gone you just know they are going get even more sloppy. I think they will lose out to the internet. And I’ve got to say, based on their current offerings and customer service, good riddance.
March 10th, 2009 at 7:53 pm
Good points all. We haven’t seen the end of consolidation in electronic’s retailing. However, I think CC’s demise provided an indefinite stay of execution for Best Buy.
Has anyone else noticed that internet prices are just a little less aggressive now?