As I reported last month, the auction of Circuit City’s assets happened yesterday, and according to several published accounts, Systemax came out as the top bidder for the online retail site and other intellectual property. The deal requires confirmation by the bankruptcy judge, which is expected later today.
You may not be familiar with Systemax, but you’ve likely heard of at least some of its online retail brands. TigerDirect has been its mainstay, but earlier this year the company added CompUSA.com when it bought that company’s online business as well as a handful of its retail stores. The other brands include Misco and Global Industrial.
Given the company’s emphasis on HDTV and related home entertainment products at both TigerDirect and CompUSA, the addition of the Circuit City brand and Web site will increase its strength in the online retail business for consumer electronics. You might find it odd that one company would have so many major brands, but it turns out that this can be a successful strategy in a market where there is little differentiation. The classic example is laundry detergent; next time you’re at the supermarket, stroll down the laundry aisle and see which manufacturers make the various brands. You’ll find that the majority of brands are made by just a few companies. This is because any brand with sufficient advertising is almost certain to gather up a baseline market share. So you increase market share by adding brands. Since there’s not a lot of difference between online retailers — especially for consumer electronics items — this mult-brand/multi-site strategy could pay off well for Systemax.