CarMax 2000 Annual Report Download - page 6

PRESIDENT’S LETTER
Our company is entering an exciting period.
At Circuit City,the focus is on the future. We are
entering the new decade in a strong financial
position,with a long heritage of customer service
and a continuing commitment to knowledgeable
sales assistance. We will build on this foundation,
introducing consumers to new products with
new capabilities and revamping our merchandise
presentations to display, explain and sell a full
range of products and services. I am particularly
pleased to face the future with talented Associates
whose number one goal is providing consumers
the best possible shopping experience.
CIRCUIT CITY: THE DIGITAL AGE
Fiscal 2000 marked the real beginning of what
I believe will be the most exciting time ever
for Circuit City. Amazing new applications of
digital technology had a positive impact on
products throughout our stores, opening up
new possibilities for consumers. And,I believe
the best is yet to come.
Last fall, consumers saw for the first time
the extraordinary picture delivered by digital
televisions,and demand quickly exceeded the
limited industry supply. As digital content
increases and pricing becomes more attractive,
we anticipate growing demand for both 4:3
and 16:9 wide-screen sets. Development of
display technologies such as plasma and liquid
crystal hybrids add to the industry’s television
sales potential.
Fiscal 2000 was the second full year DVD players
were available. With attractive entry prices as
low as $159,the industry sold three times as
many units in calendar 1999 as in 1998. As we
introduce more brands and features,such as
multi-disc changers that allow a single unit to
serve as both a primary CD player and DVD
player,consumer appeal will expand significantly.
DIRECTV sales continue rapid growth with
household penetration of direct broadcast
satellite signals still at only 13 percent. Access
to local stations,high-definition programming
and built-in features such as personal video
recording technology and Internet access are
further increasing the functionality of DIRECTV
and should contribute to continued strong
sales growth.
Like DIRECTV,wireless communications
exemplifies the marriage between hardware
capability and service offerings. The consumer’s
choices have exploded and now include numerous
analog and digital options. Many rate plans
and packages offer long-distance service and
Internet access. With penetration at only about
30 percent,the growth opportunity in wireless
remains enormous.
Still in its infancy, broadband Internet access is
another product and service combination that
offers new capabilities. In fiscal 2000,Circuit City
became one of the nation’s first retailers to sell
CableLabs-certified DOCSIS modems. These
cable modems provide Internet access up to 50
times faster than the standard telephone modem.
Similar capabilities using telephone-based digital
subscriber lines are now available,and we expect
broadband access via satellite in the near future.
Once again,our customers will be faced with
multiple digital product and service options,and
our professional sales Associates will be available
to assist.
In fiscal 2000,personal computers remained our
strongest major category despite difficult year-
over-year comparisons and continued erosion in
average retail prices. Advances in technology
—
PIII,digital imaging,voice recognition,digital
audio recording,to name a few
— reinforce our
belief that the home office category will provide
further sales and profit increases in fiscal 2001.
With advances in technology,digital audio
recording capability is available in both the
consumer electronics and personal computer
categories. Audio CD recorders allow consumers
to customize CD recordings for personal enjoy-
ment. With a computer and Internet access,
consumers can download compressed music
for playback on a portable MP3 player.
In major appliances,we are seeing significant
technological and competitive changes.
Technology is creating ovens that cook faster;
front-loading,super-efficient washers; and
refrigerators with digitally controlled temperature
zones. Our sales remained healthy throughout
CIRCUIT CITY STORES, INC. 2000 ANNUAL REPORT
4
The new digital cycle with its full-featured, often
complex, technologies creates an ideal opportunity for
Circuit City. A long history of sales training, a national
store base and alliances with industry-leading vendors
will help position us at the forefront of this cycle.
W. ALAN MCCOLLOUGH