Industry trade publication, Twice.com, is reporting that Ultimate Electronics who went bankrupt a little more than a week ago is now asking a Colorado bankruptcy court for permission to liquidate all of its assets with the goal of closing its doors for all of their stores by April. The report says that Ultimate Electronics is looking to hire Gordon Brothers Retail Partners and Hilco Merchant Resources to help with the liquidation.
This news comes as mid-sized big-box retailer, Sixth Avenue just pulled out of the Philadelphia area market but continues to do business.
The gaping hole in the marketplace left by Circuit City, Tweeter, The Good Guys, Myer Emco, Ken Crane's and countless brick and mortar stores is being filled more by Wal-mart, Target and Costco than by specialty AV. While this is good news for the Vizios of the world - the Ultimate Electronic news comes as a devastating blow to some higher end brands that invested heavily in stocking Ultimate with equipment to compete at the big-box, mass market level.
Ultimate Electronics sold products ranging from computers to video to home theater to 12 volt (car audio) to gadgets and beyond. They were closer to a Best Buy or a Circuit City than a specialty audio play like Tweeter, who had more high end audio and specialty products. Ultimate is quickly becoming a case study on how brick and mortar can't compete in a low-price-only marketplace filled with efficient online retailers who can provide end users with a tax-free, low cost sale that doesn't carry the burden of the human and physical resources of a big brick and mortar store.
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Consumers will find tremendous bargains at closing Ultimate Electronics stores including HDTVs at up to 60 percent below retail price. That's well below retail cost. Ultimate Electronics has stores sporadically located around the country including Washington State, Arizona, Colorado, Minnesota, Oklahoma, Wisconsin, New York, Texas and other locations around the country.
Other than stores that sell cereal by the ton - it's hard to tell who, if anyone, will fill the void left by these retailers. Possibly, the new business will simply be done online. The moral of the store is that price doesn't sell - consumer demand does. Apple has their hundreds of stores packed with cult-like fans buying product at high margins thanks to offering high value, great support and service paired with true value. While getting into the Apple store is the new, "easy get" goal of many AV companies, there is only so much room for high end audio in their slick stores. Specialty AV retailers should be looking to figure out what Apple does right at retail and replicate it, because unlike Ultimate, Circuit, Tweeter and everyone else that has enthusiastically gone out of business in this new economy - Apple has the answer for how to get big margins and service dollars in ways Costco, Wal-mart and Target cannot.