Best Buy and Circuit City's Revenue Models: The Threat from Wal-Mart?



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Code :BSM0029

Year :
2005

Industry : Retailing

Region : USA

Teaching Note:Not Available

Structured Assignment :Not Available

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BestBuy and CircuitCity's Revenue Models: Profits from Extended Warranties CircuitCity was originally established in 1949 by Samuel Wurtzel as a television retailing operation under the name, Wards Company. Over the years,Wards became a full-line electronics specialty retailer. Its first electronics super store was opened in 1975 and the company was renamed as CircuitCity in 1984. During the 1980s and most of the 1990s, CircuitCity was the largest electronics retailer in the US. Business consultant, Jim Collins, in his best-selling book, Good to Great, wrote, "From 1982 to 1999,CircuitCity generated cumulative stock returns 22 times better than the market, handily beating Intel,Wal-Mart, GE, Hewlett-Packard andCoca-Cola". In 1996, for the first time, Best Buy overtook Circuit City in terms of revenues...

Wal-Mart in Warranty Business: Hitting Where it Hurts Most Sam Walton and his brother James Walton established Wal-Mart in 1962. During the 1960s and 1970s, the company grew by establishing discount stores in small andmid-sized towns in the US. In 1983, Wal-Mart started amember only, cash and carry, warehouse-format store called SAM's wholesale club. Four years later, in 1987, Wal-Mart opened its first 200,000 square feet discount store/supermarket hybrid store that has since become symbolic of Wal-Mart. During the 1990s, Wal-Mart commenced its international expansion. The company entered into a joint venture to establish SAM's wholesale clubs with the number one Mexican retailer Cifra. Wal-Mart acquired stake in the Japanese retailer Seiyu, the German hypermarket chain,Wertkauf, Brazilian retailer Lojas Americanas, and ASDA in the UK. By 2005, Wal-Mart was the top retailer in Mexico and Canada. In Europe, the company was one of the leading retailers in the UK, but was incurring losses in Germany. The company was also eyeing opportunities in the east-European markets, especially Poland and Hungary. In Asia,Wal-Mart was growing fast in Japan and China...

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