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In this corner ... Best Buy ... and in this corner ... Circuit City

One is thriving while the other is diving. The difference in the ultacompetitive electronics business can often come down to something as simple as location or the sales staff's knowledge.

Published April 11, 2007



Ralph Devoe's hunt for a new computer monitor didn't include a stop at Circuit City, even though one of its stores was only a few doors down from the Best Buy where he went shopping this week.

"They often don't have what I want," the retired physicist said. "And Best Buy just seems a little better. The salespeople actually know what they're doing."

Though Best Buy has its detractors, Devoe's dislike of Circuit City illustrates a challenge facing the electronics retailer as it competes in the shadow of its larger, younger rival. Its sales staff at stores is thinner and product selections are often more limited and less organized.

The companies' financial results are telling. Best Buy, the nation's No. 1 electronics retailer, last week posted an 18 percent rise in fourth-quarter profits despite a bruising environment of flat-panel TV price drops. No. 2 Circuit City, on the other hand, swung to a loss in the quarter and is shaving its work force by 8 percent, laying off 3,400 of its most experienced (and expensive) clerks.

Analysts say Best Buy is executing well on all fronts. Its rapid expansion and earlier investments in its Geek Squad tech-support service and high-end Magnolia home theater segment - all part of its "customer centricity" strategy - are paying off.

"Circuit City has spent a lot of time catching up, and right now, they're not catching up fast enough," said Stephen Baker, analyst at market researcher NPD Group.

Yet the tale of the dueling electronics chains goes beyond numbers.

It boils down to consumers, where they like to shop and where they spend their money.

For sure, bargains and good rebates could be found at the stores of either chain - an important draw for the price-conscious American public.

But other times, it's as basic as how a store feels, how the products and aisles are laid out, how the workers there treat you.

"I like how it's easier to find things (at Best Buy), and it's cool when you walk in and they greet you," Dustin Durham said outside a Best Buy, clutching a new projector.

Durham used to shop at a Circuit City when he lived in Kentucky but moved a year ago to the San Francisco Bay Area where both stores geographically compete neck-and-neck. He hasn't been back to a Circuit City since, because he said the store just felt "like a maze."

In some cases, it just comes down to location. With more than 800 Best Buy stores in the United States, compared with Circuit City's 650, Best Buy Co. Inc. has an upper hand at the moment.

"I don't have anything against Circuit City, but this one is just closer to me," Daisy Zhao said, as she stepped out of a Best Buy with a new digital camcorder.

Analysts agree that Best Buy and Circuit City do a better job of training its employees on high-tech products than other large general retailers.

"One of the key differentiators of retail stores is the person on the floor," NPD's Baker said.

And that customer interaction, he said, will be all the more important as Circuit City and Best Buy continue to battle not just each other but the growing conveniences of online shopping.

[Last modified April 11, 2007, 01:49:58]

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