Store Location Matters
By David Dorf on Feb 06, 2009
The closing of Circuit City was bad enough, but the ripple effects that will be felt across the US are only just beginning. This ABC News article looks at the side-effects of such a large closing, especially with respect to real-estate.
Ironically, real-estate may be one of the reasons Circuit City finds itself in this position. CC had tremendous growth in the 1980s and the first half of the 1990s. At the time, the electronics market was fragmented, and there was no strong competitor. This allowed CC to consider itself a destination location. That is, people will travel specifically to the store as opposed to driving to a shopping area. So CC built stores in "B" locations that were cheaper. Best Buy, on the other hand, focused on locating their stores in the best "trade areas" -- large shopping centers, preferably near highways.
Poor store locations, combined with a vast number (many from acquisitions) of stores in need of remodeling, started to seriously impact performance in 1995. You can learn more about Circuit City's demise in this excellent Shopping Centers Today article from late 2004. I also built a CC timeline in this posting.
Today there are lots of options for retailers to better analyze their real-estate portfolios. Ubiquitous mapping software combined with demographics can create interesting mash-ups that help determine which areas are under-served and which are over-served. For example, the Oracle Site Hub can work with Google Maps and Oracle Spacial to deliver meaningful data in order to make better decisions about store placement. See my past posting for more info.
I wish the best for all those at CC and hope the slowdown in retail doesn't get any worse.