Archive for March 9, 2009

Circuit City’s demise may mean more driving

Circuit City Tombstone
In our most recent Ratings of electronics stores, Circuit City, like most other national electronics-store chains we rated, scored well below the best independent electronics retailers and regional chains. (Our complete Ratings of electronics retailers are available to subscribers.) So on the basis of customer satisfaction, the closure of 500 Circuit City stores doesn't seem like a huge loss.

But people don't necessarily choose to shop at Circuit City, or any other place, solely because they expect a great retail experience. They may also choose a store for its proximity. Indeed, in our latest electronics-store survey, carried out last year by the Consumer Reports National Research Center, 38 percent of respondents said convenient location was a reason they would patronize a store. Only low or sale prices were a bigger lure, cited by two-thirds of respondents.

Thus, the real cost of Circuit City's disappearance may come in the consumption of more time and gas to drive to a different electronics retailer. For buying big-ticket items such as TV sets, that alternative is quite likely to be Best Buy, which accounted for one in four of the major-electronics purchases cited in our report—more than twice the share of Circuit City, the second most-mentioned option.

Will the demise of its biggest electronics rival allow Best Buy to raise prices or otherwise diminish the experience of shopping at its stores? In theory, it might. In practice, growing competition from other types of retailers in selling major electronics goods—and this pesky little recession—will likely restrain Best Buy.

Indeed, many consumers may even save money and boost satisfaction if the closure of their local Circuit City store prompts them to buy their electronics at one of the stores that did better than the big chains in our Ratings—like an online retailer. Though only one in five purchases of a major electronics item in our survey was made on the web, purchasers who did buy online were more satisfied overall than those who bought in a brick–and-mortar store. That held even for items you might not think of buying online, like a TV set.

—Paul Reynolds

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