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 Reuters' Shop Talk blog Monday compares the Blockbuster Inc. offer for Circuit City Stores Inc. to Hollywood's formulaic blockbuster films. The blog examines step by step the plot elements of Mark Wattles' current dealmaking effort with his prior push to unload Hollywood Video. There are a lot of interesting similarities. However, there is another blockbuster retail merger you could also compare it to: Sears, Roebuck & Co.-Kmart Holding Corp.
Now, no one would dare suggest Wattles is in the same league as Eddie Lampert -- granted people (including Lampert himself) once had the audacity to compare Lampert to Warren Buffett, though not much recently -- but there is certainly a comparison to be made of these deals. For starters, all four retailers are has-beens. In 2005 when Kmart bought Sears, Wal-Mart Stores Inc. and Target Corp. had long surpassed both of them as leading discount retailers with better store formats and lower prices. Sears, with its broad mix of clothing, appliances, tools and bed sheets, was also stuck somewhere between the world of department store giant Macy's Inc., the big-box discounters and the big-box home repair centers like Home Depot Inc. and Lowes Corp. The merged company remains as troubled and stagnant as ever. The same could be said for Blockbuster and Circuit City. Blockbuster has been hobbling along for nearly a decade since pundits first started to suggest its future was, well, nonexistent. At the time, cable providers were just beginning to introduce on-demand content, Netflix Inc. had begun its online rental service, and in some cities there existed an e-commerce service called Kozmo, which hired couriers to not only delivery videos, but the candy and popcorn to consume while enjoying them. Certainly Blockbuster outlived Kozmo, but cable companies have expanded on-demand by offering movies the same day as their DVD release, and DVDs have become so cheap that a disc on sale may cost consumers an extra Lincoln over the Blockbuster rental price. As for Circuit City, it also faces some of the same issues as Kmart and Sears. With the advent of flat-screen TVs, Circuit City found itself facing a new host of competitors beyond just Best Buy Co. The new technology offered Wal-Mart and its Sam's Club warehouse chain along with others like Costco Wholesale Corp. to push deeply into consumer electronics. With the introduction of electronics came a push into the associated media -- movies, music, games. The mindset amongst consumers became convenience. Why bother going to Circuit City to snag the latest release when you're already at Target picking up Windex and Bounty? Another less upbeat trait they all share is the perception of poor customer service -- perhaps best exemplified by Circuit City's 2007 layoff of 3,400 experienced sales staff. Ever walk into a Blockbuster and ask if they have something more than two years old, not to say older than the kid behind the counter like "Wall Street"? Good luck. However, if you had stayed at home, and simply used your remote to search for it, most likely the cable box would not only offer the on-demand option, but tell you when it will air for free. The same could be said when purchasing electronics, say a digital camera. You're likely to find better information about cameras online than from a salesman at Circuit City or Sears. Then you can simply login to Amazon to order and wait a few days for it to arrive. Of course, if you can't wait, well Circuit City, where you can order online and pick up the same day at a store, may be your place. Maybe there is a use for all those Blockbuster locations after all. Now that's an idea as crazy as Kozmo. - Matthew Wurtzel CategoriesComments
From: knowitallhtiguy,
I hear you C.M.! I too was a firedog vendor who got tired of customers asking for me to do direct business with them bcuz they were sickened with the lousy service from circuit city. the most retarded thing the uppers at cc did was to get rid of their pro sales team, all the while the uppers line their pockets with shareholders money. cc better shape up and show why their store is better than wally world and target. The product line alone makes them a better choice but if you can't get someone in the store to explain the complexities of buying these new lcd's and plasmas, we'll just end up with a nation full ignorant people with a piece of crap tv hanging on their wall that they bought from walmart or target. GET IT TOGETHER CC!!
Posted on:
May 9, 2008 1:24 PM
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I was once a vender for Circuit City Stores. I was layed off in March 2007. Our company installed Flat Panel TVs and Home Theater Systems for residental customers who got their equipments from Circuit City. We took pride on our work and bend over backwards for the customers. When a part was wrong we would go to the Store for the customer at no extra charge. Customers were happy with us working in their Homes. I have customers calling me and even going to the Stores and asking for the Technician who did their install two years ago. Many said they will not go to Circuit City to get an install done much less buy their equipment there.