Top CE retailers Best Buy and Circuit City are working to upgrade their look and feel as both companies recently announced improvement plans touching on one-half billion dollars each. Both cite recent research results targeting new ways to boost traffic and keep the customer in the store long enough to make the sale as the genesis for the changes.

Steve Sechrist
Senior Analyst and Editor
of Projection Monthly &
Microdisplay Report

Best Buy said they will expand the highly successful customer centricity model that includes a store make-over, expanded product line and new staff, all tailored toward specific customer groups including: affluent professional males, (dubbed "Barry" by sales floor workers); young entertainment enthusiasts ("Buzz"); upscale suburban moms; families that are budget-minded technology adopters ("Ray"); and small businesses with fewer than 20 employees.

The company originally planed to convert all its US stores (over 900) to the customer-centricity model within three years but recently decided to accelerate this plan to have all of its stores operating within its customer centricity model by next March.

Another part of the upgrade will be to enhance its home theater segment by expanding its digital TV line-up and adding Magnolia Home Theater shops, the company’s high-end subsidiary, into Best Buy stores. In addition, the company will directly target small business consumers for the first time with its Best Buy for Business focus starting with more than 120 US stores. The company earmarked almost $500M for the project that includes opening up to 80 new stores in the new fiscal year.

For its part, Circuit City is also planning major upgrades to over 80% of its 600 plus stores in the US to the tune of $320M in retail improvements, plus another $250M for supply chain and IT improvements.

Calling it "the largest remodeling effort in the company’s history," the new store look will be based on elements from the "Home Entertainment Innovation Project" culling the best ideas from the company’s "lab-stores" set up to test customer reaction and buying patterns.

The new look will include an 8K square-foot home entertainment area that includes a massive plasma TV wall and home vignettes to attract and sell popular flat panel displays. This is from test store results showing that more than 70% of the in-store customers visit the plasma wall, with a 35% boost in the "linger effect" and 15% jump in average TV sales compared to other non-video wall lab stores. The company also emphasized 80% of sales associates said the plasma wall was "essential" to assisting customers.

Our take - top CE retailers are investing heavily now in preparation for another hot holiday buying season with new and innovative ways to capture the imagination (and pocket books) of the US consumer. Both have set up "lab-stores" to study new concepts and consumer reactions, and you can bet both are watching each other as these test results are turned into the latest store motif meant to convert that customer into a buyer. What’s more, smaller players will be watching too and will likely adopt some of the best practices hoping the magic will rub off on them. –SS

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