Circuit City sets smaller store, new kiosks

Consumer-electronics retailer testing new store type, will open 300 new stores in next two years: executives.

By Parija B. Kavilanz, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- Circuit City will roll out new, smaller stores in June that showcase consumer-friendly innovations such as in-store kiosks that enable "real-time" chats between customers and the retailer's Firedog technology support staff, CEO Philip Schoonover announced Monday.

Schoonover unveiled the technology during his presentation to an industry gathering at the National Retail Federation's annual conference in New York.

John Mulleady, Circuit City's vice president for real estate and construction, said he's now working on building 200 to 300 new stores in the next two years - a jump for a retailer that has been building 10 to 12 stores a year, according to Reuters.

A short video clip presentation showed a Circuit City (Charts) customer struggling to decide whether he wanted to wall-mount his new flat-panel TV or put it on a stand. He walks over to the kiosk, touches the screen and a Firedog staff member pops up on the screen to offer "live" assistance. After a brief Q&A, the customer makes his decision.

Circuit City, the No. 2 electronics retailer after Best Buy (Charts), has already deployed the system in 50 stores and will be adding the kiosks to more locations, including new prototype stores that will roll out in June, Schoonover said.

The latest store format will be smaller - approximately 20,000 square feet - compared to the typical 30,000- to 35,000-square-foot existing Circuit City stores, Circuit City spokeswoman Jackie Foreman told CNNMoney.com.

In addition to the kiosks, the retailer will also arm employees with new wireless "tablet PCs." Schoonover said the tablet PCs act as a "guided selling tool" to help employees to better understand customers' needs and help decide on product choices - what type of flat screen TV they want, for example.

Using the PC tablet, employees can quickly sketch a sample diagram of the customer's living room and enter specifics such as size of the room and height of the walls. Based on other variables such as brand preference and price, employees can then recommend the best options for the customer.

"This kind of technology and innovation, we believe, can delight our customers and maintain sustainable growth despite the challenges," Schoonover said, referring to the company's surprise third-quarter loss, which he blamed on the cut-throat holiday price wars on consumer electronics, especially flat-panel TVs.

"We believe technology is a key enabler for us and our multi-channel strategy from here on. Our goal is to be at the forefront of change," he said.

While Circuit City has stores in Canada, Mulleady said "not today" when asked if the retailer was looking at additional international expansion. Mulleady, a former Wal-Mart Stores Inc. (Charts) executive, said many U.S. retailers run into problems internationally by not understanding the local markets.

"They are trying to repeat the model that works in the United States overseas," he said.

He said success depends on finding the right local partner, and often companies need to be able to absorb many years of losses to succeed abroad.

Mulleady made the comments as part of a panel discussion on retailers' real-estate strategies.

James Bersani, Limited Brands Inc.'s (Charts) executive vice president for real estate, also spoke on the panel. The two executives said retailers are constantly testing different store formats to accommodate ever-changing customer tastes and shopping patterns.

Bersani said that 80 percent of Limited's roughly 3,500 stores are mall-based and as such, the retailer keeps a close eye on the health of the malls it occupies. With no new malls being built, he said the healthiest ones are those that reinvest in and upgrade their properties.

While Limited is buying Canadian lingerie retailer La Senza Corp., profits are a reason Bersani said the retailer has not opened up its stores internationally.

"We all want sales growth," he said, "But we want profitable sales growth."

Best Buy, Circuit City sales climb in December

Innovation back at 'real' stores Top of page

Reuters contributed to this report
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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.