Best Buy, Wal-Mart Take Bulk Of Circuit City's Business--Report

Best Buy Co. (BBY) and Wal-Mart Stores Inc. (WMT) captured two-thirds of Circuit City Stores Inc.'s (CCTYQ) business in the 10 months after the retailer went out of business, according to a study by NPD Group.

The research firm, which provides consumer research for many retailers, including Best Buy and Wal-Mart, isn't releasing total market-share gains by either company. But it said Monday that Best Buy picked up more market share, measured in dollars, than Wal-Mart in key product categories, such as flat-panel televisions and notebook computers, between March 2009 and December 2009.

"Best Buy is clearly the number 1 U.S. electronics retailer and Wal-Mart is clearly the number 2," said Stephen Baker, NPD's vice president of industry analysis.

Shares of Best Buy recently traded up 1.2% at $45.41, while Wal-Mart shares fell 0.2% to $54.97.

Despite speculation by some outsiders that Wal-Mart captured more of Circuit City's business than Best Buy did, Baker said NPD's numbers didn't show that, particularly in the biggest product categories.

"Best Buy is gaining share and extending its lead, and the two of them together are extending even further their gap over anybody else in the market," he said. "If you look at it in the U.S., it is a two-horse race in terms of consumer electronics."

Best Buy added 5.2 percentage points to its dollar-share of flat-panel TVs from March 2009 through December 2009, while Wal-Mart added 3.2 percentage points, the firm said.

Best Buy added 5.5 percentage points to its share of both the notebook-computer market and the digital-camera market, while Wal-Mart added 2.3 percentage points in notebook computers and 2.7 percentage points in digital cameras.

For desktop personal computers, Best Buy added 4.7 percentage points of market share, while Wal-Mart's dollar-share added 2.7 percentage points.

Wal-Mart made a bigger push into consumer electronics in 2009, revamping these departments in its stores, adding more brands and emphasizing low prices in its marketing push. Those moves, along with falling prices for notebook computers and TVs, helped Wal-Mart, Baker said.

Still, he said, "Even Wal-Mart has a long way to go to catch up to Best Buy" in market share.

NPD didn't release market-share changes based on units sold, saying the wide range of prices for products in the industry make that figure less meaningful than dollar-share figures. In categories with rapid price deflation, such as flat-panel TVs, however, Baker said the market-share trends could "look a little different."

Regional players, such as Hhgregg Inc. (HGG), and multi-channel consumer-electronics sellers, such as Systemax Inc. (SYX), which bought the rights to Circuit City's Web site and which has been opening stores under its CompUSA brand, are growing, Baker said. But they are far smaller than Best Buy and Wal-Mart, and it's too early to say whether they are taking substantial parts of Circuit City's old business.

"While they may be gaining some share, the problem ends up being [that] everybody else pales in comparison to Wal-Mart and Best Buy," he said.

NPD's data were gathered from a nationally representative sample of the 1.8 million panelists involved in the firm's consumer-tracking service.

-By Mary Ellen Lloyd, Dow Jones Newswires; 704-948-9145; maryellen.lloyd@dowjones.com

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