Circuit City was once the biggest retailer of electronics. So what happened?

Best Buy quietly came into the picture in the 1980’s and began to change the game. In 1989 Best Buy introduced the “grab-and-go” store format, making it quicker for people who knew what they wanted. Then they eliminated sales rep commissions, creating a low pressure sales floor. Best Buy also earned consumer points when they aquired Geek Squad. They also sell private label electronics through the Insignia and Dynex brands. Best Buy made a name for themselves by redefining the consumer experience in the category. They built a better experience than Circuit City and stole the category from under them.

But don’t count Circuit City out just yet. Circuit City has been and is still considered a traditional big box retailer, but they are certainly capable of category innovation. After all, they did spawn CarMax out of their own image. CarMax changed the used auto industry by redefining the buying experience. CarMax is now a completely separate company, but that’s not the point. It’s the experience, stupid! Circuit City is finally changing the customer experience at their own stores.

For over 20 years Circuit City has been in the real estate business as much as they have been into electronics. They have had a surplus of unused real estate, which they have begun to sell off and/or use more effectively. Around 200 new stores will be built between now and 2009. Half of the new stores will replace stores that will be closing. Many of the new stores will be a lot more intimate. The first next-generation store opened this past June in Norfolk, VA. Another one just opened up in Richmond, VA, a few miles from their corporate headquarters. These new concept stores are part of a potentially major rebranding effort. These stores even have a new name. Say hello to “The City.”

I was pleasantly surprised when I visted the new concept store yesterday. The City is more engaging and easier to navigate than a normal Circuit City. The associates wear black T-shirts and jeans reminiscent of Apple stores. There’s even a community area where kids can play while you shop. You can sign up for free a computer networking class or even a Madden tournament on X-box on the community board. There’s a different feel to the store and the brand. It’s a good start. It’s uncertain whether the new name will stick, but they new attitude and focus on the customer experience are here to stay (I hope).

Circuit City has no choice but to change. They went from champion to challenger and there’s no where to go but up. Circuit City’s stock was at $3.76 per share last week. At that price, rumors spread about a possible buy out. They closed above $5.00 yesterday. Circuit City needs to continue its forward momentum. It’s my personal opinion that Wall Street often makes it difficult to make bold moves like a total rebrand. A recent conversation with a branding expert lead me to believe that it would be easier for a well funded private equity firm to rebuild Circuit City. I remain optimistic that the brand can bounce back. Keep your eyes open for The City of the future.

Filed under: Branding, Industry News, Luis Carranza, Strategy, VCU Brandcenter