In a story last week, the Wall Street Journal reported that consumer electronics retailer hhgregg is planning a massive expansion, starting with the mid-Atlantic region but then spreading throughout the U.S. The company currently has 127 stores and plans to add up to 45 more stores in the Philadelphia, Baltimore, and Washington, D.C. metropolitan areas. This is part of a plan to add as many as 600 new stores.
The company is taking advantage of depressed commercial real estate rates, and is able to make favorable deals on properties that were left vacant when Circuit City went out of business last year.
It makes sense to expand when real estate prices are low, especially if you have the cash to bankroll the project. However, the company is moving into hotly contested territory. We have already seen aggressive growth by the New York City retailer, 6th Avenue Electronics, into New Jersey, Pennsylvania, and Delaware. PC Richard & Son is also looking to expand regionally beyond its New York City base. Hhgregg feels that it can gain an edge with consumers because its employees work on commission and are authorized to bargain with shoppers. I don’t know how much of an advantage this would be, as many shoppers seem to prefer to research the best price for the product they want, and then go buy it. Will enough of them prefer trying to haggle for a better deal?