Riding The Crest Of A Wave

Brandweek,  April 17, 2000  

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Circuit City has capitalized on the rise of digital technology to wire up its leading role in consumer electronics retailing

The U.S. consumer electronics industry in the doldrums only three years ago due to a lack of new products, has jumped back into high gear, in large part because of a single word: digital. A whole range of new offerings, from satellite TV and digital video disks to digital cameras, high-speed modems and personal video recorders, has drawn consumers back into stores and sent the stocks of consumer electronics retailers into an upward swing.

Circuit City, a leader in this industry with $10.6 billion in sales last year, has zeroed in on the rush to digital, branding itself as the place where consumers can get the help they need in figuring which products are best for them. "The digital world is exploding and will continue to explode," explains Circuit City media director Carol Fuller. "Our advertising lets consumers know that we are the place where they can learn about and see live demonstrations of the newest digital technology. We can do that with the highly trained sales counselors we provide."

With 571 superstores and 45 mall-based Circuit City Express stores, the retailer has more outlets than any of its competitors. It is one of the top five newspaper advertisers in the U.S., with buys that include weekly freestanding inserts. Its TV presence was mainly in national spot until the latter half of the 1990s, when it began adding sports events on the broadcast networks. Not long after that, it expanded its use of national TV, including cable. "We went into cable primarily to expand our reach over the fragmented viewing situation that we're faced with," Fuller says. "There are so many choices today for viewers, you can't confine your TV buys to broadcast."

Circuit City was also attracted to the programming options available on cable.

"I would have to be honest and say we like the programming on cable," she says. "There are a lot of sports and there are more family-oriented programs."

The consumer-electronics giant has its biggest presence on ESPN, TBS, TNT and Discovery, Fuller says, and it also buys time on Comedy Central, E! Entertainment Television, Lifetime, USA, CNN Headline News, Sci-Fi, TLC and Animal Planet.

To raise its profile even more, it takes advantage of cable network promotions. "We did a lot of promotions last year," Fuller says. Circuit City participated in USA Networks' Journey Down Under sweepstakes, which gave away an Australian vacation while promoting a miniseries. It also took part in TLC's annual Adrenaline Rush Hour sweepstakes, which promotes one of the network's more popular weekly series and gives away a trip. It helped sponsor sweepstakes tied to TBS' annual James Bond movie marathon, Nascar racing on TBS and the release of the movie The Bachelor, in conjunction with TBS and TNT's NBA coverage. The latter promotion gave away an Ultimate Bachelor Sports Weekend trip to the NBA All-Star Game in San Francisco to its top winner.

"These promotions get us a lot of exposure," Fuller says. "They create excitement on the air and in the store."

With an in-house ad agency that includes 58 media professionals, Circuit City is able to meet the challenge of negotiating a media schedule that best meets its needs, Fuller says. "We purchase our television more efficiently and effectively in-house than any ad agency could ever do it for us," Fuller says. "It used to be pretty easy to buy television a long time ago when there were three networks and all the viewers were there, but we don't have that luxury anymore. It takes a lot of analysis and competitiveness. It's a big challenge for buyers today to come up with the right plan that will drive business.

"If you ask five different buyers to put together a media plan, all five will come back with completely different plans," Fuller continues. "All five may be good, but they'll each have different strategies. There are so many choices that it makes our job a little more difficult to make sure we're still getting the eyeballs."

If annual growth is any indicator of how well Circuit City is doing at reaching those eyeballs, then its in-house agency is right on target. For the fiscal year ended Feb. 29, total sales for Circuit City Stores Inc. rose 17 percent, to $12.62 billion from $10.80 billion in fiscal 1999.

The company expects to open as many as 25 new superstores before March 2001 and remodel 30 to 35 existing ones, adding special displays for demonstrating new technologies and expanding selections of entertainment software, computer software and videogame hardware and software.

The company will launch a new image campaign in May and anticipates continued strong sales growth during the coming 12 months. It also expects to continue its relationship with cable.

"Cable is an important part of our TV usage," Fuller says. "It broadens our reach. Viewers have a lot of choices out there today. The fact is, a lot of viewers aren't as loyal to broadcast TV as they were ten years ago."

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