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Circuit City's Hard Sell
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Herman Sykes, 34, of Waldorf, was standing in the aisle at Kohl's as his wife shopped for items for their 14-year-old son and 9- and 8-year-old daughters. "It's all about bargains now," said Sykes, a plumber. "There's so much uncertainty." The family's next stop was Wal-Mart, not Circuit City or Best Buy.
"We're bypassing Circuit City and Best Buy and shopping more at Wal-Mart and Target," he said. "Right now, the market being what it is, you've got to watch your finances."
David Morris, a senior analyst at Mintel , a marketing research company, said there was potential for a company such as Best Buy, which has squeezed Circuit City, to become squeezed by Wal-Mart. "In this economy, Wal-Mart's value quotient resonates with a broader consumer base," Morris said. "Retailers like that are best positioned in the market. Does that mean there's added competition for a retailer like Best Buy? Yes."
But that doesn't necessarily mean Best Buy will be hurt, he said. For one thing, Best Buy does not have a reputation for being a luxury, high-market player. "They play to the value customer," Morris said.
Generally, electronics buyers find Best Buy salespeople more knowledgeable than those working at the discounters, Morris said. "If you go into Best Buy, the salesperson isn't going to know everything, but he or she will know more than the average representative at discount stores," he said. "Or in some cases, there are no reps at all."
Still, Best Buy recently warned its investors that it had recorded lower-than-expected revenue. It also said, "The uncertainty regarding future consumer spending has limited the company's ability to project revenue for the critical holiday shopping season."
In a news release, Best Buy President Brian Dunn said: "In 42 years of retailing, we've never seen such difficult times for the consumer. People are making dramatic changes in how much they spend, and we're not immune from those forces."
Staff writer Dion V. Haynes contributed to this report.
