By Mike Duff
Consumer electronics retailers are battling it out in a market thrown wide open by the demise of Circuit City.
Both national and regional retailers have seen an opportunity in the closing of the country’s second-largest consumer electronics retailer.
The regional retailers are making some of the most noise, despite the economy. For instance, last month hhgregg detailed an accelerated growth plan that now calls for the opening of 20 to 22 stores during the current fiscal year, up from a previous goal of 16 to 18.
Capitalizing on declining commercial real estate costs, the chain—with 110 stores in 10 states, mainly from Indiana to Georgia—is expanding into new markets such as Tampa, Fla., Savannah, Ga., Evansville, Ind., and Memphis and Tri-Cities, Tenn.
hhgregg has already opened four new stores this year, two in the North Carolina markets of Asheville and Wilmington and two in the existing markets of New Hilliard, Ohio, and Snellville, Ga.
In fiscal 2011, hhgregg plans to launch between 40 and 45 new stores, concentrating on large and midsized mid-Atlantic metropolitan areas including Philadelphia, Baltimore and Washington.
“We have an extraordinary opportunity to gain market share by taking advantage of the current rental rates and excess availability in the real estate market,” said Dennis May, hhgregg president and chief operating officer. “The combination of our effective operating model, an opportunistic real estate environment, strong partnerships with key vendors and the availability of talented field-level personnel create a significant opportunity for the company to accelerate its growth.”
To fund store expansions, hhgregg announced an equity offering last month that it expects to raise approximately $53.5 million.
In connection with its store expansions, hhgregg will open its fourth distribution center in autumn 2011.
P.C. Richard & Sons, which operates in the New York metropolitan area with 55 stores, is another regional that is pursuing opportunity based on the current dynamics in electronics retailing, spending much of spring and early summer opening up six new stores, all in former Circuit City locations.
The latest to open, in Mount Laurel, N.J., debuted on July 1. Previously, the company opened stores in New Brunswick, N.J., on June 10, Eaton Township, N.J. on June 4, Norwalk, Conn. on May 20, College Point, N.Y., on May 15 and Brick, N.J. on May 13.
The company backed up store expansions with local marketing campaigns. “We extended our advertising for print, radio and cable in Connecticut and lower New Jersey, and print and radio in the Philadelphia market for Mount Laurel,” said Glenn Sahagian, P.C. Richard broadcast media director.
Not surprisingly, national retailers are eying Circuit City’s empty stores and customers. Best Buy has taken over some of the former Circuit City locations, including a highly trafficked store in New York’s Union Square.
Meanwhile, Best Buy and Walmart seem to be preparing to battle head-to-head for former Circuit City clientele. Recent strategic moves by the world’s biggest retailer reveal that the chain is looking to be a destination point for personal computers. Walmart is rapidly cutting prices on personal computers. Meanwhile, Walmart has renovated its computer displays at 1,200 of its 3,600 U.S. stores.