hhgregg Starts Its Implosion

To no one’s surprise, hhgregg (lower caps is intentional) announced on March 2nd (2017) the closure of a third of its stores across the country. I predicted this outcome about a year ago when I openly questioned the raison d’etre for the consumer electronics, appliances, and home furniture chain. The Indianapolis-based chain had exploded across the country right when Circuit City went bankrupt and Best Buy started to struggle. hhgregg even took over some of Circuit City’s old locations, and irony that was probably lost on the then-high flying executive team of the newcomers.

Best Buy, Amazon, Wal-Mart, Home Depot, Sears, Target, and Lowes have come to dominate the space that hhgregg is attempting to operate in with a mostly brick-and-mortar presence. All of these competitors sell the same merchandise as hhgregg, and they all have superior buying power with vendors.

Some of these competitors have additional advantages. Amazon doesn’t have to pay for brick and mortar stores, and is controlled by a single shareholder who doesn’t care if the company makes money. Home Depot and Lowes offer complementary home improvement items to the appliances and electronics supplies that they sell. And Wal-Mart, Sears, and Target offer one-stop shopping for all consumers’ needs–not just appliances and electronics.

Who’s going to take all of this suddenly available retail space? My bet is Apple, Amazon, Aldi’s and Trader Joes–the true industry disrupters of the 201X’s. Stay tuned to see what happens.

Update 4/7/2017. Despite aggressively peddling the chain to dozens of private equity firms and other investors and shutting down scores of stores and even a few distribution centers, management announced its intention to liquidate. Five thousand employees will be losing their jobs.

In related news, after a 33 year hiatus, JC Penny announced earlier in the year its intention to start selling appliances again. By the time of hh gregg’s liquidation announcement, JC Penny had added the appliances to about two dozen locations out of their 1000 total stores.

 

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