Circuit City Wants To Install Your Home Theater

Circuit City's plan to beef up its home theater installation capabilities drew a mixed response from home integrators with some saying the retailer's brand will add weight to the burgeoning market and others cautious about a powerful potential competitor.

"I'm thrilled and can't wait to see it happen," says Ray Lepper, president of Home Media Stores, a digital integrator in Richmond, Va., and past president of CEDIA, the trade association that represents more than 3,000 custom installer and digital integration companies. "They will help shift the paradigm that the CEDIA channel has been shifting for 15 years that this stuff is so complicated that it's worth paying someone to install it."

In April during the company's earnings conference call, Circuit City president and CEO Phil Schoonover told investors the company would aggressively grow its home theater capabilities by offering affordably priced home theater installation services during the second half of the year.

Schoonover says the company currently offers custom installation services in-house in 13 markets and contracts with third-party providers outside those areas. The new growth plan for home theater installations would include a mix of Circuit City installers and third-party service providers working primarily in tertiary markets.

Jeremy Wolfson, president of Connect Home Theater And Automation, a home integrator in Wayzata, Minn., says he was mildly concerned by Circuit City's plan to more aggressively target home theater installations. "I'm concerned to the point that I want to keep my eye on it," he says. "I'm not all that worried because the stuff we do is pretty intricate and I don't think Circuit City would be interested in doing it."

Wolfson thinks Circuit City is more focused on selling products in its stores and then simply offering installation services to go along with the product sale. "I'd just as soon let Circuit City do that kind of stuff; we are more interested in doing home control systems," he says.

Lepper believes Circuit City will help stabilize the market and create new opportunities for custom home theater designers and installers. "They are going to establish the entry-level, baseline position for in-home services associated with consumer electronics," he says. "They will stabilize the bottom of the market and that's a good thing."

Circuit City's brand name and advertising clout could create new interest and higher demand for custom installers, Lepper says. "There will be plenty of people who will want something better."

But Lepper warns the Circuit City brand is a double-edged sword that could hurt regional home integrators that have struck alliances with large production homebuilders.

"The Circuit City brand name is very attractive to production builders, particularly national ones that respond to national brands because it makes selling easier," he says.

As a result, some local installers who rely on production builders could be squeezed out if the builder decides to partner with Circuit City, Lepper says.

"They [local production builder installers] could either strike alliances with Circuit City or have their lunch eaten," he says. "Some people in the CEDIA channel may have to go to work for these guys."

Still, Wolfson believes integrators that specialize in custom home solutions will stick with their market niche rather than striking a deal with Circuit city, "If Circuit City approached me with some installations that were over their head and asked me if I would be interested in doing them, it would depend on the conditions," he says. "But I wouldn't be that interested in partnering [full-time] with them."

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