Circuit City Customers Destined for Best Buy, Wal-Mart

When Circuit City was on the verge of liquidation, Jim Ristow, executive director of Home Entertainment Source, spun it into a positive for his specialty electronics buying group members.

"It's billions of dollars of consumer business that has to go somewhere," he said.

Unfortunately for the specialty electronics industry, 66 percent of Circuit City customers will take their business to Best Buy or Walmart, according to the NPD Group.

In a recent survey of Circuit City customers, 55 percent say their future electronics purchases will be from Best Buy and 11 percent plan to buy at Walmart. The most popular reasons for their choices:

• Price (40 percent)
• Product selection (29 percent)
• Store location (22 percent)

For specialty dealers, it's nothing gained, nothing lost, according to Stephen Baker, vice president of industry analysis at NPD. He says those price-location customers were never good candidates for specialty dealers.

As for the other 34 percent of surveyed Circuit City shoppers, it's not clear if they are specialty candidates either, Baker says. "The only statistically valid findings were Best Buy and Wal-Mart. After that there were a bunch of stores named but not in sufficient quantity."

Baker doesn't think specialty dealers going after former Circuit City customers will have a lot of return on investment (ROI).

"You have to be proactive. Get in front of people. Circuit City was a big-box store with big-box products, but it also had big-box advertising. For [CE Pro] readers, that's difficult," Baker says.

"They don't have many locations. They don't do advertising like that. Circuit City customers are mostly transactional. Customers for CE pros are more solution-oriented. Even if there is a piece of that [former Circuit City customer business] out there that’s available to [specialty dealers], the sweet spot isn’t large."