Who's the Next Tweeter?
By Tom LeBlanc
Ultimate Electronics and hhgregg may soon fill a void left by the last independent specialty retailer with a national footprint.

Being the next Tweeter is both good and bad.

The good part is that, for a time, the company enjoyed meteoric success expanding through acquisition beyond its New England roots to become a coast-to-coast specialty electronics retailer. The bad part is obvious: It apparently grew too fast and lost focus of the brand that made it successful before crashing and burning.

As electronics retailers expand - most notably Indianapolis, Ind.-based hhgregg and Thornton, Colo.-based Ultimate Electronics - one can't help but compare and contrast them with Tweeter. The Tweeter story also matters to the custom electronics industry, because since it closed the last of its 125-plus stores in December 2008 there hasn't been a specialty electronics retailer with a national footprint. (We're leaving Best Buy's specialty division Magnolia out of this conversation because, in most cases, customers have to walk through a big-box retailer to get to one.)



That void has a trickle-down effect: Major manufacturers are no longer focused on developing step-up product lines with exclusive distribution through specialty and custom channels. In the new retail reality, it's much harder for specialty and custom outlets to differentiate themselves in the marketplace, says Dave Workman, executive director of Progressive Retailers Organization (PRO) Group, a buying group of 17 specialty electronics retailers. "If both the high- and the low-end get distributed with the same voracity, this could be a road to ultimate commoditization."

The emergence of a national specialty electronics retailer, however, could derail that road to commoditization.

Ultimate Electronics, hhgregg
It's hard not to notice that hhgregg and Ultimate Electronics are both in hyper-expansion mode. Both companies say now is a good time to expand because the exodus of Circuit City and Tweeter has left the market ripe with opportunity and affordable store leases.

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I was in an HHGreg the other day looking for a camera. Walked out. The place is a dump. FWIW they have been open less than a year in what was once a brand new CC store. I can't envision that place being successful. It gave the feeling of a cheap ass wholesale club.

I'd be a short seller of the stock.

They make CC look like they were doing it right!

Being from Canada, I had no idea what a "hhgreg" even was. Seems like a worse choice for an electronics store name than London Drugs. (Seriously, that's an Canadian electronics store... combo pharmacy).

Fancy a sandwich with that?