November 3, 2008

Circuit City hanging on in Lakewood

Circuit City Stores Inc. said Monday it is closing about 20 percent of its U.S. stores -- cutting thousands of jobs -- in an effort to return to profitability as it finds consumers reluctant to spend and its vendors less eager to give it credit.

The nation's No. 2 consumer electronics retailer said it will shut 155 of its more than 700 stores and leave at least a dozen markets entirely. It will lay off about 17 percent of its domestic work force, which could affect up to 7,300 people.

Stores in Southern California that will be closed include those in City of Industry, Compton, Escondido, Fontana, Foothill Ranch, Mira Loma, Moreno Valley, Murrietta, Pomona, Riverside, Thousand Oaks, Santa Barbara, Santa Maria and Vista. The list of store closures can be found here. The Lakewood Center Circuit City store will remain open as will one store in Long Beach, as well as stores in Signal Hill, Norwalk and Seal Beach (in this area). That is good news for Lakewood Center which has already been decimated by the recession. Mervyn's filed for bankruptcy in September and the Macy's / May Co. / Robinsons consolidation racked the retailing world a few years back, drastically effecting Lakewood Center's major anchor tenants. The Costco store required the demolition of a brand new Macy's store which was only open for a few years before closing.

I suspect the recession will put Circuit City into bankruptcy after the dismal Christmas season this year which will likely be a bloodbath. The only bright spot might be flat screen digital TV sales in advance of the looming February 2009 analog TV signal transmission cut off (for those using over the air antennas). But I doubt there are a lot of sales left as most people have cable or satellite and most in Lakewood likely already have digital TV's.

The Costco store opening in Lakewood Center has been delayed by a number of "utility" issues. (It was supposed to open in November 2008) Apparently there is a groundwater problem of some sort. This has not been reported on from what we have seen. It is not slated to open until spring (when the recession is in full swing) and after missing the key holiday purchasing season which will be a big hit on Lakewood.

Lakewood behind cities such as Downey, Carson and Cerritos in sales tax, as only 6 percent of the city is zoned for commercial or industrial uses. The rest of Lakewood comprises homes, schools, parks and other entities.

Given that the city has a lot of work to do as they are wasting the 6% they do have. Look at the South and Bellflower location which lost Vons in the late 1990's and recently lost Bakers Square restaurant. We reported on this intersection over a year ago. Both anchor tenants likely never to be replaced without serious action by the city. That is a prime location being squandered. The city is not stepping up doing what it can to attract businesses. It focuses all its attention on the mall while the rest of the city goes downhill. Soon the loss of these businesses ans well as the home values plummeting will mean more blight and more crime as less desirable residents are attracted, such as renters and those who fail to keep their houses and surrounding property neat and tidy. And this is how the death spiral begins in a city. It takes years for the decay to spread but it does spread.

Lakewood Accountability Action Group™ LAAG | | Lakewood, CA
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