Circuit City unveils whole new look

DSN Retailing Today, Sept 4, 2000 by Laura Heller

JACKSONVILLE, FLA. -- Judging by the exterior of the new Circuit City stores--which have the same old red and gray Circuit City sign--one might think it's a chain short on new developments. But just inside its doors await many new examples of merchandising innovation in a format that the company intends to use to propel itself into the future, even as the competitive environment for consumer electronics retailers heats up.

The warehouse format has an open layout, brighter lighting, blond wood flooring, lighter carpet, colorful departmental signage, expanded assortments, checkout lanes and boxed merchandise stocked right on the sales floor. Shopping carts are now available, a first for the company, and anything small enough to fit in a cart can easily be picked off the floor and paid for at one of the new registers installed near the front of the store.

The new central checkouts have not been installed at the expense of payment terminals throughout the store-nor has it done way with its commission-based sales staff. Rather, it has added the self-service component in addition to its traditional structure.

"It's the best of both worlds. It's all designed around what are the preferences of the consumer and how do we meet those preferences," said Ann Collier, corporate communications. "We've tried to take what we do well and do it better."

Management has added accessory items and displayed them with complimentary product throughout the store. TV displays have been raised to provide better sight lines for shoppers. New audio/video technology is broken down into distinct areas, and consumers have the ability to test each product themselves, removing another long-standing reliance on sales counselors.

Dedicated areas for digital audio technology have been developed complete with interactive displays for portable digital products. An integrated home theater department offers complete setups from both single manufacturers and product handpicked and combined by Circuit City associates. Sound rooms for home and car audio remain, but the areas have been opened up and fitted with more interactive properties. Additionally, consumers can now make a car audio purchase in that department and drive around for installation, eliminating yet another step for the customer.

Home office and entertainment departments have experienced the greatest changes. "Here is where our merchandise has not been as competitive as we needed it to be," said Collier. The number of music titles has increased more than 50%, DVD product has doubled and space devoted to peripherals, accessories and software is approximately eight times larger than before. Imaging products occupy the center of the store, facing the entrance. Digital-imaging products lead into wireless services, AOL display, PCs and finally peripherals. It's an attempt to capitalize on new trends that encompass the entire spectrum of products in terms of how consumers now use such technology.

While the store size remains the same, selling space has increased by approximately 30% due to the elimination of the racetrack design, fixed walls and some backroom space now that more product is stocked on the sales floor.

The format is also a bid to attract a more diverse customer base beyond its typical 35-yearold and over male shopper making more than $50,000 a year, According to Ann-Marie Stephens, senior vp of administration. The wider aisles, smooth flooring and shopping carts should make the store easier for women to shop, particularly women with children, she said. The brighter look and expanded software, games and music selection should also help bring in younger customers.

The majority of Circuit City stores have not been remodeled since the late 1980s or early 1990s, according to Collier. Nor has a dramatically new store design been introduced since the Superstores debuted with the racetrack design in the late 1970s. As the retailer became distracted with ancillary business ventures such as CarMax and Divx, its core CE business was largely left alone.

But times have changed, and Circuit City is no longer the dominant player on the CE block. In the past two fiscal years, Best Buy has posted higher overall sales with fewer stores; a lead that is only expected to grow as the retailer becomes more aggressive in its growth plan.

John Froman, senior vp of merchandising, believes this format "has the potential to leapfrog the competition. We understand that we need to rebrand ourselves and we think this store delivers on that."

"I would admit we should have been moving toward this format a while ago, but we took the time and wanted to do it right," said Froman. "When we were opening 65 to 70 stores a year, we only had so much capital. We couldn't open new and refresh [old stores] at the same time. We've also recognized that we have a volume deficit to our competition," he said. "This store will correct that."

"It's exactly what they need to do to prepare for the future, no doubt," said David Strasser, an analyst with Salomon Smith Barney. "They have to do this as the competition is getting more aggressive. This should help them compete."