THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Friday, July 8, 1994 TAG: 9407080535
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 66 lines
Circuit City Stores Inc. wants to build a giant used-car lot on Kempsville Road near Leigh Memorial Hospital.
The consumer electronics and home appliance giant has asked the city to rezone 12 acres to accommodate a CarMax: The Auto Superstore.
CarMax is a new retail concept for the Richmond-based company. The retailer hopes to put its experience selling infrequently purchased big-ticket items, such as televisions and washing machines, to work selling used cars and trucks.
Circuit City has an option to buy the 12 acres, on the west side of Kempsville Road, from Koger Equities, said Leonard M. Newcomb III, manager of land-use services for Norfolk's Division of City Planning.
The land is valued at $1.2 million, according to the city assessor's office.
The land is zoned for office buildings, Newcomb said. Circuit City wants to get the tract rezoned for commercial use. A public hearing on the request is scheduled for July 22.
Circuit City officials did not return phone calls Thursday.
There is some concern about the zoning request. Unlike nearby Virginia Beach Boulevard, which has numerous new and used-car lots, Kempsville Road is lined primarily with office buildings and other institutions, Newcomb said.
Circuit City opened its first CarMax last fall on West Broad Street in western Henrico County near Richmond. That CarMax stocks about 500 late-model cars and trucks on a 12-acre site and offers no-haggle pricing.
``It's really nice,'' said Robert B. Smithwick, director of Norfolk's Department of Development. ``I think it's a new idea that could work well in the used-car business.''
Financial analysts have called the Henrico site a success and Circuit City is opening other lots in several major markets, including an Atlanta suburb and Raleigh and Charlotte.
CarMax is doing better than Circuit City expected, said Kenneth Gassman Jr., a retail analyst with the Richmond brokerage Davenport & Co. The lot near Richmond may be on a pace to do between $30 million and $40 million in sales a year?
Circuit City, with $4.1 billion in annual sales, is the No. 1 consumer electronics retailer in the nation. The company is still opening Circuit City Superstores, and plans to be in every major U.S. market within three years.
The retailer has shied away from discussing CarMax, calling it a test venture that has no material impact on earnings.
``They've certainly picked a good market,'' said Rik King, Hampton Roads manager for the Richmond real estate brokerage Morton G. Thalhimer Inc. ``It's a good test market for just about everything from fast food to new used-car center concepts.''
CarMax employs several strategies to put consumers at ease when shopping for used cars. Besides the no-haggle pricing, cars are put through a 110-point inspection plan and any repairs CarMax had done are noted prominently on the sticker.
Customers may wander through the lot or browse through a user-friendly computer directory of the available vehicles. On-the-spot financing is available through Circuit City's financing arm. ILLUSTRATION: Map
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