NPD Group: How Circuit City, Tweeter Troubles Affect Specialty Dealers

Smaller electronics dealers will miss the big-box stores' far-reaching advertising, which educates consumers on home technology.

NPD Group: How Circuit City, Tweeter Troubles Affect Specialty Dealers
Believe it or not, custom electronics dealers might miss big-box retailers' advertising when it goes away.
Tom LeBlanc · November 4, 2008

Circuit City is closing 155 stores and withdrawing from 55 markets and Tweeter is liquidating its 104 stores. The mass exodus is bound to have a profound impact on the electronics industry.

To get some perspective on what the impact might be for custom electronics dealers, CE Pro spoke to Stephen Baker, president of industry analysis for market research firm NPD Group. He pinpointed the following areas of impact:

Advertising Void

Most custom electronics dealers probably don’t like Circuit City’s or Tweeter’s TV commercials or print advertising. However, they might miss them when they go away, predicts Baker. He says the “amount of money spent on keeping customers informed” diminishing is the biggest issue.

“A company like Circuit City can get a lot of ink and that rising tide of awareness can’t help but hurt the overall marketplace.”

It matters little that Circuit City’s and Tweeter’s ads position themselves as experts on installation rather than custom electronics dealers, according to Baker. He says big-box advertising has gotten consumers thinking about home technology.

“Going back a few years there wasn’t any awareness at all of home installation and it was considered to be out of the [financial] range of everybody. Now people recognize that there’s a ay to install things cost-effectively and most consumers are willing to spend more money on their TV than ever in the past. All those things benefit the overall industry,” Baker says.

Small dealers now need to think about how they can fill some of the advertising void left by Circuit City and Tweeter, Baker says.

Those companies’ advertising budgets, however, might provide some obstacles. One industry buying group, Home Entertainment Source, is working on a broad TV advertising campaign. Baker says “that’s the kind of thing they’re [small- to medium-sized dealers] are going to have to do in lieu of somebody like Circuit City doing it.”

Holiday Pricing

Baker doesn’t think holiday pricing will bottom out as a result of Circuit City and Tweeter liquidating. “One of the great myths is when a retailer closes their stores there are lots of great deals to be had,” he says.

“Liquidators are there for a reason and that’s to make money. They’re not going to offer people such great deals, certainly not in the first few weeks.”

He adds that liquidators aren’t likely to provide financing or instant rebates and when consumers “do the math,” they’ll see that the dealers aren’t that great.

Emerging Stronger

The 155 Circuit City stores, the 55 Circuit City markets and the 104 Tweeter stores undoubtedly have their loyal customers. That business has to go somewhere and Baker thinks custom electronics dealers are in a position to grab it.

Getting the message out to consumers is critical, Baker says. “Be more proactive about the value that they bring to consumers. Now is the time to be talking to them.”

It’s also the time for belt tightening, Baker adds. “Everybody else is.” He says the companies that emerge from this challenging economic ere can potentially emerge stronger than ever.

Editor’s note: Circuit City is listed as an NPD Group client on the research firm’s Web site.

  About the Author

Tom has been covering consumer electronics for six years. Before that, he wrote for the sports department of the Boston Herald. Migrating to magazines, he was a staff editor for a golf publication and an outdoor sports publication. Now, as senior writer/technology editor of CE Pro magazine since 2003, he dabbles in all departments and offers expertise in marketing. Have a suggestion or a topic you want to read more about? Email Tom at [email protected]

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