Circuit City debuts in NYC with 'tech' style

Discount Store News, Nov 23, 1998 by Laura Heller

NEW YORK -- Circuit City's new stategy can be reduced to two words: new technology--a message hammered at relentlessly by category buyers assembled at the press run-through of the chain's first location in Manhattan. Held two weeks ago, the event was unusual for the notoriously media-shy company and offered a closer view of the CE chain's latest merchandising strategy and product selection.

On display in the 40,000-sq.-ft. store in Manhattan's Union Square was the recently expanded selection of computer software titles and peripherals. In August, the chain announced plans to double this assortment without adding any new computer hardware. The new selection increases the number of software titles to 2,000 from just 300 and more than doubles the number of peripherals and computer accessories.

The new build-to-order computer kiosk was on view immediately after stepping off the escalators leading up to the store. Boasting four brands--IBM, NEC, Compaq and Hewlett-Packard--the station represents retail's latest weapon to defray shrinking PC margins.

Customers order directly from the manufacturer and a system built to fit individual specifications can be shipped either directly to the shopper's home or to a Circuit City store for pick up. According to Alan McCollough, president and coo, approximately 60% of built-to-order requests are being shipped to the store, showing a strong preference for this delivery method.

Not surprisingly, Divx receives prominent play in this location. Players and movie titles are located to the right of the escalators, and strong signage greets the consumer upon entering. A Divx display unit faces the entrance, and DVD also is well represented. A demo room in the rear of the store off the TV department offers a closer look at the pay-per-transaction technology.

HDTV runs along the rear wall, with a Sony model displayed side-by-side with a fiat-panel television, also by Sony. The merchandising tactic effectively allows the consumer to experience the difference that digital technology and broadcasting brings to television.

The appliance department boasts the chains' order station, which allows the consumer to view up to 2,000 skus not available through the store's inventory. Information and product specifications are pulled from manufacturers, and orders are placed directly from the station. As with the computer order program, appliances can then be shipped either to the store or directly to the customers' home.

Digital cameras and handheld computers are displayed differently in the Union Square location. The products are merchandised with PCs and notebook computers, finally taken out from under glass counters and placed in ports to allow shoppers a more interactive experience.

High-speed Internet access through new cable modems can be previewed at this store as well. Circuit City began selling both the modem and service in conjunction with Media One last month at 17 locations in New England. (See sidebar, page 3.)

The interactive endcap display shows consumers cable modem speed and picture quality side-by-side with a 28.8-kilobit standard modem, the most typical speed in use today. The location sports just a small selection of music and videos; not surprising, as there is a Virgin Megastore just downstairs.

"We're particularly excited about going forward in terms of new technology," Richard Sharp, chairman and ceo, told DSN. "[We plan] on being No. 1 in these new technologies."

The new store is Circuit City's first two-story unit and represents one of the chain's few forays into a pre-existing facility, as it prefers to construct stores from scratch.

"It's not our plan to divert from our prototype," said John Froman, vp, merchandising. "Where we can, we will build to fit."

The chain plans to open two additional Manhattan locations within the next two years.

But Manhattan presents both unique problems and opportunities. East Coast regional CE chains have floundered during the last few years, and Circuit City's entry into the region has garnered much attention in the local and national levels.

Best Buy has yet to enter the market, although it has begun to penetrate New England and plans to open stores in upstate New York later this calendar year.