Blockbuster + Circuit City = ?
View Comments Published by cory April 14th, 2008 in Blockbuster, Circuit City, Marketing Strategy, Wheels Off.Can’t help but think that the possible combination of Best Buy and Circuit City is an old school move to get quick hit, bolt-on growth instead of a way to create value for consumers. Honestly, how does a DVD rental chain integrate with an electronics retailer other than products from one are played by products bought by another. Sure, Best Buy sells CD’s and DVD’s which can be used as the strategic difference between the firms, but…
Jim Keyes, Blockbuster CEO, dreams that this acquisition will make them a consumer-solution focused company:
He provided Apple Inc.’s stores as an example of “a user-friendly one-stop shop with solutions for the consumers” that he sees as a sort of model for a combination of Blockbuster and Circuit City.
Here’s but a few strategic concerns:
1. Best Buy’s competitive response could be to buy Netflix or get into the rental game. Neither are profit enhancing for Circuit City or Blockbuster.
2. Blockbuster and Circuit City integration (primarily real estate consolidation, product line meshing and branding) could take years, if not a decade, to fully realize synergies on. In that time, what will the consumer electronics and digital media landscape look like? In short, very different than today.
3. This will not create a new Apple. I shop at Apple, I own Apple products and there is no way that the combination of these two firms will create an Apple consumer solutions vision without completely changing what these two firms do. [on that note, see Sears + K Mart a few years later to get a sense of the enormity of the task]
This smells like a bet the company move: Wheels off.