Circuit City Ignores Carrefour Lessons at its Peril

Circuit City continues its downhill slide. It's well known that the typical in-store experience at Consumer Electronics retailers is close to that of used cars. Apparently ignoring that strategic opportunity, the company recently annouced the jaw-dropping decision to layoff skilled workers for lower-priced new hires (read: even further deterioration in customer experience).


Now comes word that the strategists at Circuit City have another growth idea. Reduce their dependence on exciting and popular brands and resurface their old low-price private labels:

Circuit City has announced it is reviving a private label strategy, a year after it largely dropped its Liquid Video and Esa brands. The company will reinforce its "strategic sourcing capabilities," likely narrowing its brand assortment by carrying more products from fewer vendors, David Matthews, executive vice president of merchandising, services and marketing, announced. (Source: http://www.planetretail.net/default.asp?PageID=EAlert&Article=56838&Date=2007-07-13)

The guys at Circuit City might want to have a chat with the executive team at Carrefours for first hand insights into the wisdom of that move:

Speaking at the recent CIES World Food Business Summit, the chief executive of Carrefour, José Luis Duran, admitted that the retailer made a mistake when it culled its supermarket ranges.

Mr Duran said the company was now undoing the damage, expanding its range by 15% annually, with an even balance of branded and private label products. Between 2000 and 2004 the company significantly reduced the number of SKUs on its shelves and also rolled out its own house brand lines. But Mr Duran said customers had responded negatively to that policy and
Carrefour now understood and recognised that choice was a major expectation of its customers. (Source: 'CARREFOUR boss admits mistake in reducing product ranges', http://www.planetretail.net; DailyNews, July 5, 2007)