Circuit City Comeback?

Do you think bankrupt Circuit City’s brand, trademarks and e-commerce business is worth $6.5 million?

Well, that’s how much the assets went for just this week at an auction to New York-based Systemax, which manufactures and sells consumer electronics online, by direct mail and in retail stores.

Systemax is hoping this move will strengthen its position as a leader in online retailing of branded consumer electronics.

Word on the street (by street, I mean the online street!) is that Systemax will resurrect the Circuit City brand, but do so on a smaller scale just as they did with CompUSA.

I can’t help but wonder if this sick brand is worth bringing back.

When you look at Circuit City’s story, it seems like a classic tale of brand neglect and mismanagement.

Oh sure, the economic crisis didn’t help… but this brand was a walking zombie for a decade or more.

What went wrong is well documented, and former employees and customers have plenty of negative stories to share.

Here’s a list of management’s bad moves based on what I’ve come across:

• Allowed customer service to significantly degrade (especially after laying off its highest-paid employees in favor of cheaper workers)
• Failed to secure good locations for its stores, favoring out-of-the-way spots vs. prime real estate
• Offered non-competitive prices
• Failed to line up with winning brands
• Stopped selling appliances even though they were #2 in sales at the time
• Didn’t go big into the growing gaming market
• Didn’t improve its web presence despite growing popularity of online retail
• Mismanaged inventory, hindering its ability to pay off debts and improve product mix

That’s a lot of bad moves, but it certainly explains why the #2 electronics retail brand in the U.S. gave way. According to one analyst, Circuit City simply failed to adapt. They had a good run over two decades and then complacency set in.

So, back to the question: Is the Circuit City brand and all of its baggage worth bringing back?

My initial reaction is: It’s worth a try! Given the potential returns, $6.5 million is a bargain price.

The Circuit City name still registers with a large segment of consumers. We’re talking about a former #2 market player here. Why not try to tap into that market and exploit the equity?

The challenge will be setting the brand up for success. To do it, Systemax will need to emphasize that this is the “new” Circuit City.

This may mean limiting Circuit City to an online brand with products consumers want to buy and with excellent responsiveness – the best online store for innovative consumer electronics.

This will be tough. Changing perception is never easy, especially when you’re starting with a plethora of bad and ugly consumer memories. The “new” Circuit City needs to separate from its old self and project a new image.

What will also make this tough is the state of the market. Analysts say sales in consumer electronics are likely to decline over the next few years as innovation slows and consumers allocate a larger share of their wallet elsewhere.

All of this has me thinking about the life and death of brands. Brands have a slow death. In fact, one might say that they never really die. They live on in memories. They live on in minds and hearts. They may not be well thought of… or they may be cherished and longed for.

In the case of Circuit City, the brand patient hasn’t been in the morgue for very long. Despite all of its missteps, it was #2 behind Best Buy. A large segment of the market was still buying from Circuit City… and they’re still familiar with the name.

They just might be convinced to come back. And disenchanted fans might just be convinced to try a “new” Circuit City, one that’s again relevant to them with the right products and the right buying experience.

What do you think? Can the Circuit City brand be successfully revived? And if you were the brand manager for a “new” Circuit City, what would you do?