FLAT-OUT DIFFERENCES; FROM PRICING AND WEB PRESENCE TO ATTRACTING CUSTOMERS, BEST BUY AND CIRCUIT CITY TAKE CONTRASTING APPROACHES TO FLAT-PANEL TV MERCHANDISING.
NEW YORK-While it is clear that Best Buy and Circuit City have placed a heavy emphasis on flat-panel televisions by offering a similar assortment of big-name brands, the merchandising approach of these big-box competitors differs widely.
On the retail floor level, Best Buy appears to focus on self-service, as is evident by its in-store Web kiosks. The retailer offers its customers the option to browse for product on the Best Buy Web site within the store, check pricing, promotions and availability.
While Circuit City's in-store customer service is by no means a hard-sell, product-pushing approach, the flat-panel shopper is reminded of the retailer's service, installation and warranty programs via signs scattered throughout television aisles.
Why have these consumer electronics giants placed flat-panel televisions so high up the totem pole within their consumer electronics merchandising strategies? It's all in the numbers: As the consumer electronics industry experienced a sales increase of about 2 percent to $96.3 billion in factory-to-dealer sales in 2003, LCD and plasma factory-to-dealer sales skyrocketed 174 percent collectively, according to the Consumer Electronics Association.
Consumers are seeking a flat-panel alternative as price points continue to slide, and these retailers are looking to ride this wave of demand.
Although both retailers did not respond by press time, HFN found some key merchandising differences via in-depth visits to urban locations.
Pricing and Assortment
In a category where prices are shrinking, Best Buy is more of a value player. In the plasma television side, Best Buy offers consumers six SKUs of 37- to 50-inch screen sizes ranging from $2,377.99 for a 37-inch Panasonic Plasma EDTV to $6,123.99 for Pioneer's 50-inch plasma HDTV. Plasma brands include LG, Pioneer, Sony, Panasonic, Philips and Samsung.
Best Buy's LCD 24 SKU television selection allows for a wider selection and deeper values due to the availability of smaller screen sizes and its less-expensive Insignia private-label line. At the low end, Best Buy offers consumers a $426.99 13-inch Sharp LCD EDTV (note it is not from the AQUOS premium line). For a little more cash, consumers can purchase Sharp's AQUOS 37-inch LCD HDTV monitor for $5,223.99 -- Best Buy's most expensive LCD model.
Best Buy's new private-label Insignia LCD line allows value-oriented consumers to step into the larger-screen-size LCD HDTV ball park, as it is available in 23- and 26-inch screen sizes for $1,223.99 and $1,366.99, respectively. Some other brands found include Sharp, Samsung, Toshiba, Gateway, the low-cost $1,423.99 Westinghouse 27-inch LCD HDTV monitor, Panasonic and Sansui.
Circuit City offers a similar breadth of plasma TVs, with eight SKUs by brands, including Sony, Panasonic, Hitachi, Samsung, Akai and ESA. The retailer is also looking to reach for somewhat fatter wallets with its $7,749.99 Sony Wega 42-inch HDTV plasma and a $7,124.99 Samsung 50-inch plasma HDTV monitor. Value is also available in lesser-known brand names like the ESA 42-inch EDTV plasma at $2,299.99 and the $2,699.99 42-inch Akai plasma EDTV.
Circuit City also offers a slightly wider LCD assortment with 27 SKUs in the store, including brands such as Sharp, Audiovox, Samsung, Panasonic, LG, Sony, Magnavox and Zenith. Shoppers that want an LCD for the kitchen can enter the category with a $349.99 Audiovox 7-inch under-cabinet LCD television. While most LCDs fall between $800 and $2,500 with 7-inch to 32-inch screen sizes available, Circuit City once again extends into a higher end than its competitor with a $9,499.99 Sony Wega LCD HDTV.
Positioning and Signage
Best Buy initially grabs the consumer on the street by hanging plasma televisions in its store windows. The plasma and LCD television aisles are flanked by home theater, satellite television and television accessories departments in an apparent cross-sell attempt. While flat-panel televisions (not for sale) are placed prominently at the store entrance, endcaps in the plasma and LCD section in one store featured their rear projection flat-screen cousins, such as a $948.99 30-inch Sony Wega flat HDTV monitor and $1,803.99 Mitsubishi widescreen rear-projection television amid a home theater lifestyle setting.
The home theater endcap draws the consumer to the section and tends to feature a mix of brands to present a custom look. At one store, the retailer presented an arrangement including Sony 3-disc DVD/CD player, XBox gaming system, Samsung HD DirecTV receiver, Athena speakers and a Tivo DVR.
Some 26-plus-inch LCDs and plasmas are lumped together in one aisle at Best Buy, while the smaller LCD models are displayed in another aisle. The televisions are displayed in two horizontal rows, one about eye level and the lower in the strike zone for you baseball fans. Prices are displayed prominently in sections, as are at Circuit City.
Because HDTV is an often promoted, but misunderstood idea, Best Buy runs loops on the televisions discussing the HDTV phenomenon, such as a CNET promotion entitled "Tips for Digital Living."
Circuit City's flat-panel section is sandwiched between the computer and home theater. While the big-ticket cross-sell is not as obvious in section positioning, video cables and accessories, including Monster Cable, are scattered throughout the LCD and plasma aisles.
LCDs and plasmas at Circuit City are also eye level and about 2 to 4 feet below eye level arranged in horizontal rows.
Circuit City lures shoppers to the section by displaying high-end plasma and LCD televisions with home theater attachments on the front endcaps. Less brand mix is evident at Circuit City's endcaps, as focus seems to be grouping various offerings from one brand. In one store, the aforementioned Sony Wega 42-inch plasma is displayed with a Sony home theater system. Rear endcaps feature the value plasmas and LCDs from companies like ESA and Akai. "Open box value" LCDs were found buried in other television category sections.
Three-dimensional standing displays in the Circuit City aisles tout installation, 24 months of no interest and sales of televisions over $699. The retailer also places signs on or near the actual televisions telling consumers of its capability to build television stands, extended warrantee programs, plasma television makeover contests (win 5 plasmas and its installation services.
Both retailers offer a wider flat-panel assortment online -- Circuit City with 51 total plasma and LCD SKUs, and Best Buy with 45. While price points mirror the in-store strategy, Best Buy breaks into the $7,000 range online with a $7,123.99, 50-inch Panasonic Plasma HDTV. Circuit City offers a few additional higher-end plasmas with four HDTV models breaking the $7,000 mark from Sony (2), Panasonic and Samsung.
Best Buy and Circuit City online brand selections are similar to in-store offerings with a few exceptions. Circuit City offers flat panels from Sharp, Audiovox, Magnavox, Panasonic, Philips, Samsung, JVC, Akai and Hitachi. Best Buy's flat-panel offerings include brands such as JVC, Panasonic, Philips, Polaroid, RCA, Samsung, Sansui, Zenith, Insignia, LG, Toshiba, Viewsonic, Pioneer and Westinghouse.
Circuit City differentiates itself by providing consumer product ratings as well as displaying "top rated" and "best seller" lists. Both retailers cross-sell accessories with the flat-panel televisions: Circuit City sells Monster Cable A/V accessories and LCD wall mounts, while Best Buy has discount offers on accessories such as Monster Cable.
Installation and Warranties
Circuit City pushes its installation services throughout the store, starting at $149 for flat-panel tabletop install to $699 for a premium 30-inch and above wall-mount package that includes speaker mounting.
Best Buy, which has made its name in custom installation with its publicized Geek Squad, offers $99 basic tabletop install to $699 flat-panel and five-speaker wall mounting.
Both retailers' offers included parts-and-labor warranties on flat panels, with Best Buy's at one year and Circuit City's at 30 days.
Caption(s): Circuit City aims for fatter wallets. / Best Buy is more of a value player.
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|Title Annotation:||Best Buy Company Inc. and Circuit City Stores Inc. offering attractive Flat-Panel Televisions|
|Publication:||HFN The Weekly Newspaper for the Home Furnishing Network|
|Date:||Oct 11, 2004|
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