Rick Aristotle Munarriz's recent ode to Best Buy (NYSE:BBY) -- and potshot at Circuit City (NYSE:CC) -- makes some excellent points. Foremost, he lays out the difficulty of competing with a pure-play leader, while simultaneously fighting back price-aggressive generalists like Wal-Mart (NYSE:WMT).
Mostly, I agree with Rick's prognosis for Circuit City. Reinventing itself by sprucing up the real estate, which I suggested the company might accelerate, isn't a slam-dunk in its bid for market share.
But that doesn't change the fact that Circuit City -- not to mention other, smaller niche competitors -- had better think of something. A story in Sunday's Washington Post highlights what might be the biggest problem: a savage pricing battle with the biggest players.
That's great news for shoppers, especially around the holidays, but it's bad news for the losers.
So, if Rick has a tactic for survival, I'm betting companies like Circuit City, Tweeter (NASDAQ:TWTR), Ultimate Electronics (NASDAQ:ULTE) and others would like to hear it. Traditional strategies like sticking to high-end products, or offering exceptional service, seem logical enough, but the market dynamics appear to have changed.
The fierceness of today's price battles imply a customer satisfied with a straight up "get me my big, brown box and get me out of the store" experience -- if the price is right. Tweeter, meanwhile, lacking Circuit City's resources to prop it up, has opted to curb its expansion while it works to improve store-level performance.
But what next? Until we find out, and however this plays out for investors near-term, it sure makes for happy news for last-minute shoppers.
If you were the CEO of a consumer electronics chain, how would you run your business to fight the big boys? Share your strategy our Retail discussion board.
Dave Marino-Nachison can be reached at [email protected].
