Tough Times for Tweeter

Late last month, Tweeter Home Entertainment Group announced that they were closing one third of their consumer electronic stores, and laying off more than 20% of their employees. The company has had its share of financial woes in recent years, and the price wars of the past holiday season punched more holes in the hull of the corporate ship. The company plans to close “underperforming” stores and focus on “consumer electronics playground” stores.

The fact is that unless the sign on the front of your electronics retail store reads “Best Buy“, you may be in trouble. Other chains also are struggling, including CompUSA and Circuit City, and some previously strong regional players such as Harvey Home Entertainment in New York, New Jersey, and Connecticut. The unit sales may be on the rise, but as prices continue to fall and competition remains fierce, margins are being sliced thinner than the smoked turkey at our local deli. The signs for a quick recovery are not good, as HDTV prices are forecast to continue to fall throughout this year. Many companies are hoping to focus on the higher end of the market where margins are fatter, but these niches are already filled by local specialty stores with established relationships with home builders and designers. It’s a small market and there’s not room for everyone to get in that pool.

So watch for electronics stores to have continued difficulties this year. If one near you decides to close its doors, you may be able to get a good deal on what they have left in stock.