Cnet predicts demise of Circuit City before Best Buy

Earlier this month, I wrote why I think Best Buy will soon follow CompUSA into the retail deadpool. Not even two weeks later, Cnet has written a piece entitled “Is Circuit City in Danger?” The piece makes the excellent argument that, if anyone is going to take the plunge into bankruptcy next, it will be Circuit City over Best Buy.

I don’t retract my prediction, but I fully agree with author Don Reisinger when he says, “Simply put, why shop at Circuit City if you can go to the Best Buy down the street?”.

True enough. The bad retail behavior from Circuit City and CompUSA has allowed Best Buy to be lazy and run their stores with little regard to costs. There is already one huge competitor to Best Buy - internet stores like TigerDirect (my favorite), NewEgg, and of course, our good friends at Amazon.com. You can buy any computer hardware, digital camera, or video camera items you might need - for great prices, better selection, and fast delivery. And don’t even get me started on eBay.

But admittedly, getting a new refrigerator or large-screen television off the internet may still make BestBuy look like an option. I think if any major competitor can come into the ring and offer more, with a better eye on the bottom line, BestBuy could be in trouble. Already, a large portion of their store is, quite clearly, occupying a market space that won’t exist in five years - CD’s and DVD’s. Computer software is already leaking money at some retailers. All the cool software is subscription-based and on the internet. If they lose more of their computer sales to online stores and The Apple Stores, what’s left? Appliances? Home Depot and Lowe’s are more than ready to sell those to you, with installation, and better technical expertise on hooking them up.

That leaves large-screen televisions and audio systems. While there are plenty of competitors, Best Buy seems to be the market leader in this arena - for now. Their biggest threat could come from Walmart, if Walmart ever decided to go into that arena. Sears/Kmart could pose a threat, too, but they hardly seem in a position to do so. So, once Circuit City bites the dust, expect a new player to emerge, else BestBuy will have a literal stranglehold on that market, especially in less metropolitan areas.

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