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Circuit City lackluster prices will not lure shoppers

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Although retailer Circuit City Stores, Inc. (OTC: CCTYQ) just a few weeks ago filed motions for Chapter 11 bankruptcy protection, you'd think all was well at the retailer. Not so -- the consumer electronics giant's shares closed yesterday at just over $0.21 and it's a ghost town scenario at many stores. After all, would you shop for holiday goods at a retailer "going out of business" in its current form? That's what Chapter 11 says to many consumers, anyway. Perception is reality.

After having visited a few local Circuit City locations yesterday, they were indeed ghost towns. There was nobody (nada, zilch) in one of the locations I visited, and only one other person in the other location. And get this: comparing several general products in several categories, I saw very few sale prices that could compete with the competition -- namely, Best Buy, Inc. (NYSE: BBY). In categories like computers and MP3 players, Circuit City's pricing was dead in the water. At least its employees were, for the time being, getting paid to stand around doing nothing.

The struggling retailer has a decent wealth of information at its website including an open letter to Circuit City shoppers (PDF File) about the bankruptcy. None of that will cool any heels, though. If Circuit City wants to do any business this holiday season, it has to act like the competition, and that means instant rebates (not mail-in ones) and aggressive price discounts on hot product categories. How about something like "Free MP3 player with purchase!" or something similar? Fly that message on the flagpole and customers will respond. Don't, and you might as well shut the doors until next year.

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Last updated: November 26, 2009: 01:37 PM

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