Question

“Your client Circuit City Stores, Inc. is an American consumer electronics retailer headquartered in Richmond, Virginia. It sells all kinds of consumer electronics, personal computers, entertainment software, and large home appliances. The company opened its first store in the 1970s, pioneering circuit city storesthe electronics superstore format in the 1990s. Currently there are more than 300 Circuit City Superstores nationwide located in all major cities across the US.The client Circuit City is considering the introduction of private label brands into their superstores. Private label brands are unbranded products made by an OEM (original equipment manufacturer). Is there any value in this product line? If yes, what are the sources of value of this program? What are the potential downside risks associated with introducing private label products?”

Answer 1

Yes there is value. The value results from lower selling price and thus more demand and more profits. Further competition among manufacturers result in better quality and lower costs. further positive reviews of the product after its use by consumers can led to higher profits. Also medications can be introduced depending upon requirements of buyers. The downside is higher dependence on manufacturer regarding quality and production. Initially due to lower price profit may be quite low. Since they are usually replicas of premium products, it is difficult to have unique identity. Further they are less trusted by consumers and this problem is greater initially.