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Gary
05-07-2005, 04:39 PM
I'm in St. Louis this weekend for mother's day and couldn't help but get a big laugh out of all the Ultimate's closing.

When they came here 2 years ago my in-laws were sure they would be the end of all us small guy's and I was thought crazy for saying this company will be lucky to be in business 5 years from now.

AHEM
05-07-2005, 09:02 PM
Stories like that warm my heart. Just wait till all of the Circuit Cities bite the dust.

Jerry
05-08-2005, 03:46 AM
Can you even imagine the corporate overhead for these type of stores?

OEX
05-08-2005, 10:31 PM
Stories like that warm my heart. Just wait till all of the Circuit Cities bite the dust.

cc was very close a couple years back - stock tanked from 60 to 3.

MikeCAT
05-09-2005, 09:55 AM
Just read somewhere that a buyout of CC is eminent. Aparently there is a corporate investment firm that is interested in a private buyout of the chain. Can't remember where I saw the article, so this is what my fuzzy brain remembers.

AHEM
05-09-2005, 10:47 AM
I don't forecast a very sunny outlook for the CC chain. At least in town here, BB must have 50 cars in their lot for every one that's at CC. The store looks old and tired too.

The8thst
05-10-2005, 12:41 PM
I still get bankruptcy papers and legal documents avery couple weeks dealing with Ultimate declaring bankruptcy.

If only I had a real claim to file against them....

jritch
05-10-2005, 02:15 PM
Are they really going away? I saw that they were re-structuring but I thought they were going to just tighten up the belt.

That is where I have a sideways source so that I can buy onesies and twosies of components that I don't have a line on.

What was the source of the info?

John

OEX
05-10-2005, 04:10 PM
CC problem is obvious. Most stores are old and crappy but renovating all of them will bancrupt them. Theyre stuck between a rock and a hard place. They did remodel our local store. The funny thing is they all want the custom install market. Look at Tweeter's planned change. A lot less box shuffle and a whole lot more CI.

Gary
05-10-2005, 08:48 PM
Are they really going away? I saw that they were re-structuring but I thought they were going to just tighten up the belt.

That is where I have a sideways source so that I can buy onesies and twosies of components that I don't have a line on.

What was the source of the info?

John


If closing about half your stores is tightening your belt, then that's what there doing. They have so much debt and such mediocre cash flow I have no idea how they can survive without a huge cash infusion.

The fact is there can only be one low cost leader in any given category and BB seems to have that wraped up, with these big box stores the net profit goal is in the 2%-3% range, not a lot of margin for error, pretty easy to lose your ass.

Kelly
05-11-2005, 07:43 AM
If closing about half your stores is tightening your belt, then that's what there doing. They have so much debt and such mediocre cash flow I have no idea how they can survive without a huge cash infusion.

The fact is there can only be one low cost leader in any given category and BB seems to have that wraped up, with these big box stores the net profit goal is in the 2%-3% range, not a lot of margin for error, pretty easy to lose your ass.

Even BB has those times where they close under performing stores, and I think that they'll have more of them with this so called "customer centric" BS.

CC tried the CI route, only to learn that they couldn't really do it properly. I have no doubt that BB will find themselves in the same boat after a short amount of time.

Think about it. BB hires some ex CI businessman, who LOST his business, to run their CI program? Great choice. This is obviously someone who can really keep things going in the right direction.

On another note, wife and I were in the local BB last night (Wife's idea to pick up a gift certificate from BB as a birthday present for a friend) and she was nearly run over by a BB employee with a handtruck. She tells the offending idiot "you could have gone around me", to which he simply smiles like the idiot he is. I tell her that's their new customer centric idea in action..... :lol:

Theaterworks
05-11-2005, 07:47 AM
CC problem is obvious. Most stores are old and crappy but renovating all of them will bancrupt them. Theyre stuck between a rock and a hard place. They did remodel our local store. The funny thing is they all want the custom install market. Look at Tweeter's planned change. A lot less box shuffle and a whole lot more CI.

They all want it because that is where the growth and current revenue is. I'm convinced no one but perhaps Tweeter can really do it in any meaningful way; there are too many small things that a big company cannot standardize to make it work. People, technical problems, the foibles of individual clients, staffing & training. No way CC can do it, no way BB can do it (in spite of what Jeff Wagner says and clearly believes), and I'm wondering if Tweeter can either.

I really believe this industry is leading up to a consolidation; the pendulum has to swing the other way at some point. How that will be done I do not know.

OEX
05-11-2005, 03:03 PM
Your will see a dramitic shift in our industry. We will have 2 disctinct segments within our market.

1) Price leaders - these will be the box shufflers. They will find it impossible to be profitable with this strategy. They'll be whoring out material everywhere they can. It will prove to be a failure. Some CI will try this route to. All with the same results. This group will offer little value to the consumer.

2) Service leaders. This group will do it neater, better, cleaner and more techincally correct. This group will strive to provide the ultimate in service while providing top shelf systems. This group will be very profitable and will have a shiny future. This group will truely be the "Value added" type companies. Systems will be better than the sum of the parts or 'boxes.'

Which group do you wish to be in? Think about this as your doing your next install or proposal. The business strategies we follow will ultimately determine our chance of survival.

Kelly
05-11-2005, 05:20 PM
The "high end" store that Tweeter bought out, here in town, did a little bit of CI. And they had a real penchant for pissing the customers off. Why? They couldn't seem to get it done right the first time, and wouldn't continue to follow through until it was right.

So I'd say that Tweeter, who may have an edge in the CI field, will have to really do something out of the ordinary as far as retail shops go.

And BB doing CI? That is so comical it hurts. Who will they hire and train? The ex cable guys? The guys we fire due to inability? The guys who go out of business (oh wait, they've already done this....lol)?

Just how many times can they send the village idiot out to a job to correct the problems that are created from those $150.00 plasma installs? How can you sell "any box", or any HTIB, and offer CI? CI just doesn't fit the mold for the box moving mentality that surrounds BB.

Gary
05-11-2005, 07:50 PM
Tweeter is also closing a bunch of stores. Want to have some fun, go to any of these stores websites, click on investor relations and start reading their financial statements.

I often here people wondering how these stores with their overhead and margins can make any money. Well the answer is they don't. Both Tweeter and Ultimate are losing money hand over fist. Best Buy the best managed of the big box stores is the only one making a profit and the profit was a whopping 2.8% over the last 12 months.

aforlano
05-11-2005, 08:49 PM
Ya know, I'm actually glad this is happening. I feel sorry for the employees, but I think it's about time Corporate America reaps what it sews.

Chains like Tweeter/Sound Advice, Circuit/Best Buy, etc. insist on whoring out their product, and delivering piss-poor customer service. That's why they are losing money hand over fist.

I will continue to tell my customers that I'm not the cheapest guy in town, and that they are paying for service and training. I'll close business all day long.

Regards,

Fred Forlano
Higher Definition

AHEM
05-11-2005, 11:06 PM
Chains like Tweeter/Sound Advice, Circuit/Best Buy, etc. insist on whoring out their product, and delivering piss-poor customer service. That's why they are losing money hand over fist.

Not only that, but corporations like that almost always blow into a town that's been inhabited for decades by successful indies, probably chuckle when they see what they're up against, and proceed to blow them out of the water with mass advertising and cut throat prices...not to mention the various tax breaks and abatements that they're getting. All the while, they're profiting from selling name brands that were made famous by the very dealerships that they're putting out of business.

10-15 years ago, BB, CC, and of course Walmart began they're continental march across America devouring everything in their path. The manufacturer's were tickled shitless because they now had a new avenue for increasing revenues and growth, which is historically demanded by the Far East powers that be.

Just as things started to taper down a little bit, here comes the late 90's and with it brought an economic boom and a new source of revenue; the internet and e-commerce. The suppliers, not shortsighted enough to totally lose track of the proverbial horse who brought them their, begin designing derivitive lines and call them Integra, ES, Elite, Soverign, Diamond, Cinema Series, Ultravision, Proscan, etc.

The turn of the century brings with it the official dawning of the age of the custom installers. With it, comes yet another growth channel; distribution. The big box movers aren't threatened because the CI industry can't compete with them one on one. However, the distribution age was the last nail in the coffin for many of the indy A/V shops.

As my dad always told me, "you can only GIVE stuff away for so long."

rmht
05-12-2005, 11:16 PM
This whole story unfolds in my backyard. Ultimate Electronics aka Soundtrack is the local grown CE whore along with the usual scourge BB and CC. I know Dave Workman (he wouldn't know me), ex CEO of Soundtrack along with many from that very successful 80's, early 90's AV retail oufit. I got my start working for an ex VP and investors who started their own oufit focusing on Home Theater here in Denver.
As UE grew they tried to match Walmart and BB, CC not push expertise, mid-fi. Made sense, as we have already postulated, larger the outfit the less the custom touch.
Anyway, Funia and Apex DVD's at $75 bucks were not going to keep rent payments on the ridiculously large footprints, Walmart wages were not going to keep around folks who truely understand AV integration.
Fast growth into farflung locals (compared to Colorado) during the go-go late 90's killed it, there are many stores closing even here as elsewhere as UE has filed, the owner of Hollywood Video bought controling interest months ago and brought extra money to revive it.
Yada-yada....one of the few joys left in my life is a slow day where I can have a cup of coffee and read the paper, yet another story of my big, dysfunctional cousin soiling the industry, before rushing off to work.
UE is not going anywhere, as of now, just shutting down alot of stores. Product is hard for them to come by. I often would send a customer to the local Soundtrack to view a RPTV we were discussing. The other day one came back saying "I liked the JVC D-ILA but the Soundtrack guy said it has been discontinued. Later discovered it was Soundtrack's JVC credit that had been cut off.
OEX had it right with the distinctions in future AV markets, Soundtrack is just one example of that.