Tuesday, January 08, 2008

Circuit City to experiment with small-format stores?

TWICE, This Week in Consumer Electronics, reports that Circuit City may begin testing smaller stores in an effort to catch up with industry-leader Best Buy. While not exactly boutiques, the stores, dubbed "The City" will be about a third smaller than typical stores, or 20,000 sq.ft. instead of the usual 33,000 sq.ft.

While the stores will be a bit smaller, they'll still be packed full of merchandise. In fact, the ever-shrinking size of today's consumer electronics products was actually cited as one reason why smaller stores might work well. You're probably wondering why Circuit City thinks their approach will work. TWICE says this:

What makes The City different? It's 20,000-square-foot size,
for one. Tests showed that the smaller footprint is more productive
than the chain's typical 33,000-square-foot box, Pappas said, thanks to
shrinking product dimensions. The new stores are also merchandised more
efficiently, with narrower but deeper assortments of best-selling,
high-margin products. Modular fixtures allow The City stores to quickly
alter the mix as demand changes, and greater integration with online
inventory allows in-store customers to choose from 1 million SKUs and
have their purchases delivered free of charge.

innovations include prepackaged product bundles, and high-tech tools
like wireless tablet PCs, which sales associates or "partners" use to
check inventory, schedule Firedog appointments and walk shoppers or
"guests" through the sales encounter. The tablets' "guided selling
application" helps identify products and services appropriate for each
customer by drilling down through a hierarchy of circumstances,
explained Brian Leach, The City's regional VP. This allows associates
to cover multiple categories ("You'll never hear 'It's not my
department,'" Leach said), while addressing the training issues
associated with non-commissioned sales staffs.

So in large part it sounds like the smaller format is part of a bid to improve both perceived and actual customer service by making service personnel more knowledgeable (or at least giving them more/better access to information) and more efficient by un-tethering them from their sales registers. After this Christmas shopping season, I'll be the first to say that better customer service would be a very welcome change, as both Circuit City and Best Buy gave me some headaches while trying to buy a few high-margin (I'm sure) items. Amazon.com didn't, so ultimately they got my money, even though the bricks-and-mortars guys gave me the opportunity to actually try out the kit I was shopping for.

While Circuit City will continue opening new stores in their regular format this year, Steve Pappas, the firm's Small-Stores President, noted that most of the new stores built this year would be of the smaller "The City" variety.

The idea has some merit, but will this be enough to improve their less-than-stellar image? And if the service enhancement portion of the changes work well enough to deploy into a bunch of new stores, why doesn't Circuit City deploy them to their existing (large) stores as well?

Tags: , ,

No comments: