Circuit City chases service with new Firedog brand

Firedog is the consumer tech-support services brand that the No. 2 U.S. electronics retail chain launched in September and is now promoting with an advertising campaign.

"We've got a vision of being a services company with retail roots," said Marc Sieger, senior vice president for services at Circuit City. "Services is going to be a huge play, and people want it."

Circuit City's Firedog push--featuring employees garbed in bright green polo shirts and the slogan, "We make technology's tail wag"--comes as electronics retailers try to boost margins by getting consumers to pay extra for help installing, using or fixing their new gadgets.

Firedog is also Circuit City's answer to Best Buy's Geek Squad, which offers computer services, and its Magnolia home theater installers. It also replaces Circuit City's former PC repair service called IQ Crew, which it said shoppers perceived as arrogant.

Circuit City estimates the size of the market for consumer home theater installation and computer services now at $20 billion, and growing at a double-digit clip.

Firedog will offer Circuit City shoppers help with everything from mounting a flat-panel television on a wall to setting up their home computer to getting digital cameras to work on both their PC and television.

Circuit City and Best Buy are focusing on services to differentiate themselves from discount retailers like Costco Wholesale and Wal-Mart Stores, which are selling a wider array of brand-name electronics.

All in one
Unlike Best Buy's dual Geek Squad and Magnolia brands, Circuit City sees Firedog as an "umbrella brand" that can fit multiple services. "It's broad enough to allow us to add new services under that umbrella without having to create new brands every year," Sieger said.

At the moment, Best Buy has a foot up on Circuit City with its Geek Squad business, which it acquired in 2002 and has spent the past four years developing, analysts said.

Best Buy has roughly 11,000 Geek Squad agents and 1,900 home theater installers, while Circuit City, still testing the waters, has roughly 3,000 Firedog employees.

"Best Buy in general is a really tough competitor for Circuit City. They've got wider distribution, they've got more marketing dollars, so Circuit City to a certain extent is fighting an uphill battle," said Pacific Crest Securities analyst Andy Hargreaves.

But analysts said that the services market is so large and fragmented that it leaves room for other players, like Circuit City, to successfully compete.

"There's huge demand in the marketplace, and as a result, it's not going to be satisfied all by one company," said Scot Ciccarelli, an analyst with RBC Capital Markets.

Best Buy and Circuit City do not disclose how much revenue services bring in, and analysts have said it is too early to tell if the investment required to build these services will pay off. But they agree it makes sense to target services.

"I believe it will be a revenue and profit driver in the future, but right now the primary purpose is to help round out your offering." Ciccarelli said. "If you're just selling widgets, that's a tough game."

And demand for help using new technology should persist beyond the holiday season well in to early next year, when Microsoft launches its Vista operating system.

"With Vista coming up, you're going to see a lot of people who don't want to tackle that challenge themselves," Sieger said. "They're going to say: 'Can you help me not only load the operating system, but show me how to navigate data migration from my old computer to the new computer?'"

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