To avoid repeating last year’s mistakes, Circuit City is negotiating with vendors to improve its response to pricing changes and to better communicate that pricing to consumers. It is also working to develop pricing flexibility for extended warranties and cabling as prices of flat-panel TVs decline. It is also increasing the frequency of warranty pricing reviews, for example, from quarterly to monthly.
Analysts are concerned about the company’s exposure to margin risk. Estimating that flat-panel TVs make up roughly a quarter of Circuit City’s sales, Kaiser is watching how successfully Circuit City closes the solutions-based HDTV sale with audio, cabling, warranties and installation services.
There is also that void left by the firing of all those skilled employees.