CarMax 2001 Annual Report Download - page 5

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including rate plans, available online from a brick-and-
mortar retailer. Equally important, we enhanced the site
and added customers while also maintaining high
standards for customer service. Even during the peak hol-
iday season, all orders for in-stock merchandise received
by 1:00 p.m. Eastern time were shipped the same day,
and the site was available to consumers more than 99
percent of the time.
The Challenges Ahead. I feel good about what we have
accomplished, but believe there remains much yet to do.
The cost of last year’s full remodels and the business dis-
ruption to the existing store environment were not
acceptable. And, although customers in these stores have
given us great reviews, with the sales and economic
uncertainty experienced at the end of the year, it is difficult
to immediately measure the results of our investment. In
fiscal 2002, we expect to open 15 to 20 new stores and
relocate approximately 10, all of which will follow last
year’s design. However, we will limit our remodels to 20
to 25 and refine the design so that it is less costly and
less disruptive.
We also will direct significant attention to marketing
programs that cost effectively communicate the changes
we have made. We have added new leadership to our mar-
keting team and believe that the combination of talent and
experience we now have will give creative life to our
advertising initiatives.
Circuit City’s financial strength has been driven not
just by our consumer offer, but also by our ability to
deliver the offer consistently and efficiently. In addition
to the changes in our store design, we began in fiscal
2001 to roll out Internet-based sales training programs
for all our store Associates. We plan to expand this
training method to more product categories in the
coming fiscal year.
Given the challenging retail climate, we will even more
closely examine our operating practices. Specifically, we
are undertaking initiatives to:
●further tighten inventory management, including
enhancing our forecasting tools, so that we reduce
inventory in the distribution system and increase
inventory turnover while also maintaining high
in-stock positions in the stores;
●apply the Six Sigma methodology to critical processes
so that we measurably increase customer satisfaction
while also reducing costs; and,
The more contemporary shopping experience includes
shopping carts and a bank of cash registers at the front
of the store, brighter lighting, more colorful signs, more
open space and improved product adjacencies. During
the year, we fully remodeled 26 stores, primarily in south
and central Florida, to reflect this design, and we opened
23 new stores that follow this concept.
The new design excluded major appliances, allowing
us to dramatically increase our selection of faster grow-
ing, more profitable consumer electronics and home
office products. Our original intent was to test a free-
standing appliance store. However, as appliance sales
softened and competition intensified, we decided to exit
that category and remerchandise the appliance space in
all remaining Superstores. That exit cost us approximately
29 cents per share, including one-time exit costs, appli-
ance merchandise markdowns, the appliance space
remodeling expenses and sales disruption. But, I believe
it was the right decision for Circuit City. This move pro-
vided the needed space to quickly expand selections of
digital imaging products; computer software, peripherals
and accessories; video game hardware and software;
DVD movie titles; and telecommunications products.
In addition to the full and the partial remodel programs,
we continued to enhance other areas of the Circuit City
shopping experience. During the first half, we added
displays for Internet accessibility, digital memory devices
and digital video and audio to virtually all stores. We
expanded our wireless displays to include four providers
in most markets, strengthened our ability to demonstrate
the high-quality image available via digital television and
expanded our broadband offering to include more
providers than any other retailer.
We also continued to develop our e-commerce site, the
first launched by a national brick-and-mortar consumer
electronics specialty retailer. In fiscal 2001, we added
more than 1,000 consumer electronics and home office
products, bringing to 2,400 the number of products we
offer for sale on the Web. And, in an agreement with
Alliance Entertainment, we gave CircuitCity.com cus-
tomers seamless access to Alliance’s selection of more
than 250,000 entertainment software titles. Early in the
year, we became the first consumer electronics retailer to
provide access to Web warehouse inventory through our
in-store point-of-sale system, and at year-end, we
became the first to offer 360-degree views of products.
We also added online sales of wireless phones and the
most extensive wireless communications information,