January 26, 2010
OpEd Guest Post By Robert Farago, E-Commerce Consultant
Circuit City is dead. Long live Circuit City! A year ago this month, the consumer electronics giant filed for bankruptcy. The retailer shuttered its remaining 567 U.S. stores and laid off 34,000 workers. Last May, Systemax Inc. bought the failed brick and mortar retailer from its creditors and relaunched Circuit City as a pure play e-tailer. CircuitCity.com joined Linen’N Things and Eddie Bauer as part of a growing pack of post-C11 “zombie e-tailers.”
Bankruptcy lawyer Steve Jacubowski told Zippy Cart the e-commerce strategy makes perfect sense. “The new companies lose the old company’s enormous overheads. With a large customer database, a fulfillment infrastructure and a nationally-known brand, it’s like starting from the fifty yard line.” E-commerce entrepreneurs are now stalking bankruptcy proceedings, hoping to pick-up a well-established brand for proverbial peanuts.
Meanwhile, bankrupt retailers trying to maintain a vestige of their brick and mortar operations are not-so-gradually shifting their focus online. Earlier this month, a federal judge approved Crabtree & Evelyn’s reorganization plan. The soap seller has already reduced its retail footprint from 126 to 91 stores. As a central part of its recovery efforts, the Connecticut-based, Kuala Lumpur-owned company launched a new online store.
MediaWeek reports that the beleaguered upmarket magazine publisher Conde Nast is looking for online and/or retail partners for branded products and services, including business deals for recently terminated titles Gourmet, Domino and Cookie. Paidcontent.org says Conde Nast is including the defunct brands in its “plans to roll out a digital tablet format across all 18 titles this year, as well as expanded e-commerce and licensing.”
Why would anyone want to sell a branded product from a company and/or magazine that went bust? Al Ries reckons simple human nature works in the new owner’s favor. “It’s like Tiger Woods’ recent troubles,” the branding guru told ZippyCart. “Bankruptcy is a short-term knock against a brand. People tend to forget about it over time. If management can refocus the brand and make it stand for something online, they can recapture a large amount of its value.”
Apparently, Conde Nast agrees. “These brands still have life,” an “insider” told MediaWeek. “It’s easier to do licensing or branding development deals because the editorial doesn’t get in the way.” Now there’s a new if-not-entirely-palatable idea.
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