The Impact of 2009 on Independent Retailers

Circuit City, Best Buy, aggressive pricing, LED, Green and other factors left their mark on consumer electronics retailers

Dealers and buying group leaders had a lot to reflect on for our annual year-in-review feature. The economy steered most of the seminal events in 2009, but there were a handful of other factors that shaped the year and greatly influenced the course of their businesses and the CE industry as a whole.

On the retail front, most players agreed that the demise of Circuit City had an early and profound impact. "Never in the history of our business has a retailer of that size gone away," said Dave Workman, executive director of the PRO Group. "But I believe that Circuit failing threw a lifeline to hundreds and hundreds of retailers. The market is a very cruel and yet very fair judge of size and demand. With the downturn being what it is, had Circuit not failed, we would have had failures elsewhere. A lot of dealers have been able to scrape by and live to fight another day. It was retail Darwinism."

Major strategy shifts by other retailers and manufacturers soon followed. For one, there was the rise of hhgregg as a regional powerhouse. "I think they're on a tear, and could be very strong over time," said Richard Glikes, the HTSA buying group's executive director, adding that the company is well-financed. "They're going into markets where there are pretty big voids. They're aggressive and smart, and that's a good combination." 

Big Boxes
Best Buy made its share of aggressive and smart moves, but it is still perceived as a methodical company that won't take any risks in the coming months. "They're well-merchandised, have made some strategic moves, but I don't really see them taking any big leaps," Glikes said. "They're slow and steady and successful. As smart as they are, there's no next-big thing for them."

Throughout the year, Best Buy exhibited the extent of its aggressiveness through its pricing strategies. "They slapped a lot of manufacturers in the face with how aggressive they were with products," said Trey Thofner, president of Jetson TV & Appliance Centers, Vero Beach, Fla. "I think that's going to be an advantage to us, going forward, because manufacturers don't want the tail wagging the dog, dictating to the market what their product's going to be sold at."

There was also the move by Walmart to turn its cannons on the CE category, not only through pricing but also by adding installation services. Some said those moves, along with Best Buy's, have permanently affected pricing structures in the entire TV space. It has also influenced vendors to shift from upper-tier TVs and technologies like OLED to cheaper products that can easily feed the mass-market beast. "Walmart has re-done their departments, and they are adding services, trying to do more than just a transaction," Workman said. "You cannot ignore that they are putting emphasis on the category."

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