Circuit City  Stores, Inc.

(804) 527-4000

9950 Mayland Drive
Richmond, VA 23233
www.circuitcity.com

Computer Retailers  -  Category Directory

Sales

$9.7 billion

Business Description

Circuit City is a leading national retailer of brand-name
consumer electronics, personal computers and entertainment software. It sells

o video equipment, including televisions, digital satellite systems, DVD
players, video cassette recorders, camcorders and cameras;
o audio equipment, including home and portable audio systems;
o mobile electronics, including car audio, video and security systems;
o home office products, including personal computers, printers,
peripherals, software and facsimile machines;
o entertainment software, including video games, DVD movies and music;
and
o other consumer electronics products, including wireless phones, corded
and cordless phones and accessories.

Merchandise lines vary by location based on store size and market
characteristics. Most merchandise is supplied directly to the stores by regional
warehouse distribution facilities.

 Merchandising. Each Circuit City store location follows detailed
operating procedures and merchandising programs, including procedures for
inventory maintenance, customer relations, store administration, merchandise
display, store security and the demonstration and sale of products. Most
merchandise is supplied directly to the stores from one of Circuit City's eight
automated distribution centers, which are strategically located around the
country, and from a centrally located automated software entertainment
distribution center. Merchandise mix and displays are controlled centrally to
help ensure a high level of consistency among the stores. Merchandise pricing
can vary by market to reflect local competitive conditions. Circuit City uses a
centralized buying organization. The central buying staff reduces costs by
purchasing in large volumes and structuring a sound basic merchandising program.
Circuit City's merchandising strategy emphasizes a broad selection of products,
including the industry's newest technologies, and a wide range of prices. To
improve the company's competitive position, Circuit City has initiated efforts
to source more product directly from overseas manufacturers, which enables the
company to lower product acquisition costs and to increase product
differentiation. During fiscal 2004, Circuit City began to introduce its own
unique merchandise brands, including Liquid Video, Verge and esa, tailored to
specific needs within a broad consumer base. These products supplement one of
the best selections of name-brand products in the consumer electronics industry.

Suppliers. During fiscal 2004, Circuit City's 10 largest suppliers
accounted for approximately 56 percent of merchandise purchased. Circuit City's
major suppliers include Sony Corporation; Hewlett Packard; Panasonic; Toshiba;
Samsung Electronics America, Inc.; Hitachi America LTD; Thomson Multimedia,
Inc.; eMachines, Inc.; Canon U.S.A., Inc.; and Apex Digital, Inc. Brand-name
advertised products are sold by all Circuit City retail locations. The company
also offers exclusive, private-label merchandise brands that are sourced by the
company directly from the manufacturers. Circuit City has no significant
long-term contracts for the purchase of merchandise.

Advertising. Circuit City's business relies on considerable amounts of
advertising to maintain high levels of consumer awareness. Advertising
expenditures from continuing operations were 3.3 percent of net sales and
operating revenues in fiscal 2004, 3.5 percent in fiscal 2003 and 3.8 percent in
fiscal 2002. Circuit City uses multi-page newspaper advertisements, network and
cable television advertising, magazine advertising, direct mail and interactive
media. The multi-page newspaper advertisements provide an extensive presentation
of the range of consumer electronics products sold at Circuit City stores and
generally feature products at highly competitive prices. Circuit City is
generally one of the larger newspaper advertisers in markets that it serves.
Television and magazine advertising focuses on promoting great values on
products and new software releases as well as differentiating elements in the
service offering such as the Web site's Express Pickup feature.

Competition. The consumer electronics industry is highly competitive.
Circuit City's competitors include large specialty, discount and warehouse
retailers as well as local, regional and Internet-based retailers. As part of
its competitive strategy, Circuit City offers competitive prices on the
merchandise stocked in its stores and offered on its Web site. Customers who
order on the Web and pick up their product at the store using the Express Pickup
feature automatically receive the lower of the Web price or the in-store price.

Circuit City distinguishes its stores from those of the competition by
offering a broad and, in some cases, unique merchandise assortment, delivering
outstanding customer service and providing the convenience of a one-stop
shopping solution for consumers. The company's merchandise assortment includes
new technologies and great values and is dynamic, responding to changes in the
industry's product trends. To keep pace with rapidly changing technologies, the
company's most recent store designs feature flexible displays to accommodate new product
offerings. In addition to offering one of the best selections of name-brand
products in the industry, Circuit City offers its own private-label merchandise
brands. Products carrying these brand names are available exclusively at Circuit
City. Product specialists, trained using comprehensive online training courses;
convenient credit options; home delivery and home installation; and onsite
installation centers for automotive electronics all demonstrate Circuit City's
strong commitment to customer service.

Customer Satisfaction. Circuit City conducts market research to improve
its understanding of what its customers want and expect. Market research
techniques used include focus groups, online surveys, telephone interviews, exit
interviews and "mystery shopping," in which a professional mystery shopper acts
as a customer to evaluate customer service performance. This feedback enables
management to identify issues that need to be addressed, helping the company's
stores and Associates remain focused on providing outstanding customer service.
 

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