Wal-Mart gets credit for the Circuit City melt-down

[liberal N proud]

The 'Wal-Mart effect' strikes again
By slashing prices on flat-panel TVs, the retail giant has clobbered another sector -- this time, consumer-electronics stores.

Last "Black Friday," for its annual post-Thanksgiving sales blitz, Wal-Mart Stores (WMT, news, msgs) decided to slash the price of one of the hottest electronics items for the holidays, the 42-inch flat-panel TV, to $988. The world's largest retailer had staked similarly audacious positions before, in numerous product categories, as part of its quest to remain U.S. retailing's "low-price leader."

In turn, Wal-Mart's move caused a free fall in prices of flat-panel televisions at hundreds of retailers -- to the glee of many people who were able to afford their first big-screen plasma or liquid-crystal-display (LCD) model.

Now, it is becoming apparent that Wal-Mart's calculated decision to break the $1,000 barrier for flat-panel TVs triggered a disastrous financial meltdown among some consumer-electronics retailers over the past four months.

The fallout is evident: After closing 70 stores in February, Circuit City Stores (CC, news, msgs) on March 28 laid off 3,400 employees and put its 800 Canadian stores on the block. Tweeter Home Entertainment Group (TWTR, news, msgs), a high-end home entertainment store, is shuttering 49 of its 153 stores and dismissed 650 workers. CompUSA is closing 126 of its 229 stores, and regional retailer Rex Stores (RSC, news, msgs) is boarding up dozens of outlets, as well as selling 94 of its 211 stores.

http://articles.moneycentral.msn.com/Investing/Extra/WalMartEffectStrikesAgain.aspx#

[democraticrevolution]

1. Circuit City

Is not that great either. They are a chain store and should be avoided as well. If there are independent electronic retailers in your area they are the ones to patronize.

[WhollyHeretic]

2. CompUSA has shot themselves in the foot

Absolutely horrible customer service across the country and besides their sales their prices are ridiculous.

[lpbk2713]

10. And .... CompUSA is a heavy OxyRush advertiser.

Couple that with the fact that they have abominable customer service and high prices and I won't miss them in the least. Simply because I have only been inside their crappy stores maybe twice in my lifetime.

[Blackhatjack]

3. The OP makes a valid point... we will be left with monopolistic WalMart....

... and at that point does anyone believe they will cut prices when there is no effective market competition to force them to do that? I don't think so.

The Walmart model is to drive out the competition, become the sole supplier, and dictate terms that are favorable to their own bottom line --but terrible for the rest of the local economy and jobs.

[The2ndWheel]

4. The logical conclusion of competition is monopoly

Wal-Mart started out as a small business. If Wal-Mart didn't exist, we'd be talking about some other corporation.

[Double T]

6. Excellent point Blackhatjack. We 'allow' this to happen.

[msongs]

7. only true for a needed item - people do not NEED big screen tv's nt

[MUAD_DIB]

13. They may not need them, but the want them...even if that means

getting deeper into debt.

I still have a 19" TV that was given to me as a gift18 years ago.
It works fine so there is no need to colossalize.

[poverlay]

5. Circuit City deserves what they get. They've been selling far too poor of an assortment of

products, for far too cruddy prices for far too long. Everything they ever did well, they stopped doing for whatever reason. Probably too expensive. They burned too many customers for too long.

All these people are too greedy. C.C. would have been fine if they would've kept to their original business model/plan. Instead, they decided to "streamline" and "improve".

[bouwob1]

8. I dont know how much truth

there is to this, but I heard circuit city cut 3400 of the top paying (non management jobs) and replaced them with 3400 low paying jobs that do the same thing.

Circuit city is slowly gaining the stature that Halliburton has with me.

2 thumbs down.

[JHB]

9. It's true.

Just google "circuit city layoffs" for many, many articles on the subject.

[Bitwit1234]

11. People are not buying because they don't have the money

This is one of the effects of jobs going overseas. The middle class who used to patronize electronic stores are becoming rare. They don't have the money. They need it for staples. WalMart is feeling the pinch also. Why do you think they are slashing prices. They want what business is out there and they can afford to temporarily drop prices. And it is temporary watch and see.

[BluePatriot]

12. Hm.

Geek-hubby hasn't gone to those places for years (by choice) I think their issue was with the business model more than big TV's. It's just Fry's and Best Buy for us.