Mark Wattles knows his way around retail. So when he acquired a 6.5% stake in Circuit City last year, he clearly saw an opportunity to cash in on the consumer electronics retailer either turning its business around or at least becoming a takeover candidate. Now that Wattles has been successful in campaigning to drive out Philip Schoonover from the CEO seat, there are still some big questions and hurdles in the way of Wattles and other stockholders cashing in on a buyout.
Industry analysts have been quick to hang Schoonover out to dry over his controversial decision to lay off 10% of the chain’s highest-paid salespeople. However, it’s important to keep in mind that James Marcum, Wattles hand-picked successor for the CEO spot, inherits a lot of the same issues that were holding back the chain’s turnaround. While the layoffs of senior salespeople sent a terrible message to staff, customers and even Wall Street, insiders say the bigger issues for Circuit City are:
• Bad Locations & Leases: Most current and former employees from Circuit City report that chain’s new locations, particularly those opened under “the city” banner, are meeting or beating their sales forecasts. However, Circuit City’s total sales numbers are dragged down by older, underperforming stores in bad locations. The only way to get out of these bad leases would be for Circuit City to file for bankruptcy at some point, but that clearly would not help the company’s current share value.
• Competitive Squeeze: Let’s face it Best Buy is no slouch to have to square off with on a daily basis, so grabbing share from the top player in the category is not going to be an easy task. Circuit City is also feeling pressure at the low end from discount giants Wal-Mart and Target, who have increased their presence in key categories such as games, and flat-panel TVs. Wattles knows this all too well through his experience in running the Ultimate Electronics chain.
• Category Softening: A lot of the core product categories in the consumer electronics industry flat to down in terms of overall sales growth. Sales of CDs and DVDs are getting squeezed by the growth of digital platforms, while other growth sectors such as video games are dominated by specialty chains like GameStop.
Given all of these realities, it will be interesting to see what James Marcum and Mark Wattles can do to speed up Circuit City’s turnaround or make the chain a more attractive acquisition target. After Blockbuster dropped its purchase bid, Best Buy is the only other retailer in the category with the synergies and cash to consider some kind of merger. The recent acquisition of Napster probably means the folks in MN will have their hands full and are probably more interested in digital growth.
Of course, there is always the possibility of a financial player moving in to acquire and remodel Circuit City, the current credit crunch makes that option appear less likely, especially since no venture players have made a play for the retailer while its share price has hovered down between $1 and $2.
To Schoonover’s credit, he has improved Circuit City’s positioning by making the shopping experience more customer friendly across all channels. In addition the success of ‘the city’ format could serve as a nice platform for a future owner.
Circuit City is scheduled to announce second quarter results on Monday of next week, which could either be a stepping stone toward future momentum for Marcum or further consideration for the company’s Board to consider taking some more drastic measures.
Stay tuned.
Thursday, September 25, 2008
Thursday, September 4, 2008
Skiwear Brand Spyder Gears Up For Growth With SaaS Solutions
By Debbie Hauss, Executive Editor
Spyder Active Sports is poised for growth using Epicor Retail’s Software as a Service (SaaS) solution to provide merchandising, POS, sales audit and analytics tools for its growing specialty skiwear business. Spyder is currently the largest specialty skiwear brand in the world and outfits the U.S. and Canadian Alpine Ski Teams. Since 2006, Spyder has opened five retail stores in the U.S. The company also
sells its products to more than 550 specialty retailers in the U.S. and Canada, and in 50 countries around the world.
“The Epicor implementation began in late February 2008 and went live in three Spyder stores on June 1,” says Bard Higgins, retail business analyst for Spyder. “Since then the other two stores also have gone live.”
Spyder chose Epicor’s SaaS system after realizing that its current system would not support future growth. “Our first POS system was basic, rudimentary, and entry level,” Higgins notes. “When we took a high-level look at our long-term strategy, we realized that our original system would not support what we wanted to do. Epicor’s Software as a Service managed hosting model allowed us to add merchandising, POS and analytics very affordably.”
The pay-as-you-go SaaS pricing model allows small- to mid-size retailers to build an IT platform without breaking the bank. The Epicor solution includes implementation, integration, support and maintenance, as well as ongoing updates and upgrades. Upfront costs include a one-time start-up charge and a fixed fee.
“Epicor offers a tremendous value proposition for small to medium retailers such as Spyder,” according to Kevin Smith, CIO of Spyder, in a recent press briefing. “With Epicor we can have an end-to-end integrated solution that offers best-of-breed capabilities, the likes of which are used by large retailers, with minimal up-front cost and turnkey service and support…this basically eliminates all of the traditional barriers to entry for small to midmarket retailers.”
Four months to market
Spyder and Epicor took an aggressive approach to implementation, completing the project in just over four months. “While it might have been nice to have another six to eight weeks, just because we were also phasing in other things at the time, there was no negative impact from the aggressive schedule,” notes Smith.
To track the success of the solution, Spyder is monitoring specific metrics including dollars per sale and units per transaction. “We have seen improvement in time per transaction,” says Higgins. “And using Epicor’s tools for suggested selling and upselling, we have seen an uptick in both of those areas.”
Preparing for the future
Although Spyder does not currently sell products through its Web site, the Epicor system will facilitate growth into additional selling channels as well as more brick and mortar stores. And, with the acquisition of Cloudveil Mountain Works in 2008, Spyder has the option to quickly enter ecommerce through Cloudveil’s site. “If we move in this direction in the future, our Epicor Retail SaaS framework will enable us to support a seamless consistent experience across all of our channels…,” says Smith.
Cloudveil Mountain Works sells technical outdoor, mountaineering and fly fishing apparel. The company operates a flagship retail store in Jackson, Wyoming and sells online at www.cloudveil.com.
Find a good fit
Higgins recommends that retailers conduct a complete review before choosing an IT system vendor. “Every company we dealt with promised their system could handle every situation,” he says. “We were sold on Epicor after talking with client references who shared with us exactly how they use the system.”
Epicor also was a good fit for Spyder, Higgins adds, because of its experience in the specialty retail arena. “We are a specialty business and a lot of their customer base fit that model. And since our implementation, five or six other similar companies have gone live with Epicor.” Some of Epicor’s other retail customers include Aeropostale, American Eagle Outfitters, Ann Taylor, Zales, and Zumiez.
Spyder Active Sports is poised for growth using Epicor Retail’s Software as a Service (SaaS) solution to provide merchandising, POS, sales audit and analytics tools for its growing specialty skiwear business. Spyder is currently the largest specialty skiwear brand in the world and outfits the U.S. and Canadian Alpine Ski Teams. Since 2006, Spyder has opened five retail stores in the U.S. The company also
sells its products to more than 550 specialty retailers in the U.S. and Canada, and in 50 countries around the world.“The Epicor implementation began in late February 2008 and went live in three Spyder stores on June 1,” says Bard Higgins, retail business analyst for Spyder. “Since then the other two stores also have gone live.”
Spyder chose Epicor’s SaaS system after realizing that its current system would not support future growth. “Our first POS system was basic, rudimentary, and entry level,” Higgins notes. “When we took a high-level look at our long-term strategy, we realized that our original system would not support what we wanted to do. Epicor’s Software as a Service managed hosting model allowed us to add merchandising, POS and analytics very affordably.”
The pay-as-you-go SaaS pricing model allows small- to mid-size retailers to build an IT platform without breaking the bank. The Epicor solution includes implementation, integration, support and maintenance, as well as ongoing updates and upgrades. Upfront costs include a one-time start-up charge and a fixed fee.
“Epicor offers a tremendous value proposition for small to medium retailers such as Spyder,” according to Kevin Smith, CIO of Spyder, in a recent press briefing. “With Epicor we can have an end-to-end integrated solution that offers best-of-breed capabilities, the likes of which are used by large retailers, with minimal up-front cost and turnkey service and support…this basically eliminates all of the traditional barriers to entry for small to midmarket retailers.”
Four months to market
Spyder and Epicor took an aggressive approach to implementation, completing the project in just over four months. “While it might have been nice to have another six to eight weeks, just because we were also phasing in other things at the time, there was no negative impact from the aggressive schedule,” notes Smith.
To track the success of the solution, Spyder is monitoring specific metrics including dollars per sale and units per transaction. “We have seen improvement in time per transaction,” says Higgins. “And using Epicor’s tools for suggested selling and upselling, we have seen an uptick in both of those areas.”
Preparing for the future
Although Spyder does not currently sell products through its Web site, the Epicor system will facilitate growth into additional selling channels as well as more brick and mortar stores. And, with the acquisition of Cloudveil Mountain Works in 2008, Spyder has the option to quickly enter ecommerce through Cloudveil’s site. “If we move in this direction in the future, our Epicor Retail SaaS framework will enable us to support a seamless consistent experience across all of our channels…,” says Smith.
Cloudveil Mountain Works sells technical outdoor, mountaineering and fly fishing apparel. The company operates a flagship retail store in Jackson, Wyoming and sells online at www.cloudveil.com.
Find a good fit
Higgins recommends that retailers conduct a complete review before choosing an IT system vendor. “Every company we dealt with promised their system could handle every situation,” he says. “We were sold on Epicor after talking with client references who shared with us exactly how they use the system.”
Epicor also was a good fit for Spyder, Higgins adds, because of its experience in the specialty retail arena. “We are a specialty business and a lot of their customer base fit that model. And since our implementation, five or six other similar companies have gone live with Epicor.” Some of Epicor’s other retail customers include Aeropostale, American Eagle Outfitters, Ann Taylor, Zales, and Zumiez.
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