THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Thursday, August 25, 1994 TAG: 9408250553
SECTION: BUSINESS PAGE: D01 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 66 lines
Circuit City has ditched a proposal to build CarMax, a fledgling used-car venture, along Kempsville Road, a company spokesman said Wednesday.
Company officials were concerned by the irregular shape of the proposed site and questioned whether the giant used-car lot would be able to expand from the 12-acre site.
``That's the problem,'' said Kenneth Gassman Jr., a retail analyst with the Richmond brokerage Davenport & Co.
A 12-acre property simply isn't big enough for CarMax anymore, Gassman said. The company recently passed over an Atlanta property of about the same size, he said.
``It takes about 18 acres now to make a CarMax work,'' Gassman said.
The company has no immediate plans to file another application with Norfolk or any other Hampton Roads city, spokesman Paul Rakov said.
``As we choose sites, we're doing so very carefully,'' Rakov said. ``Because this is a test, we're moving slowly.''
He would not say whether Circuit City is looking at other properties in the area.
There is some speculation that Circuit City might locate a Carmax in the Greenbrier section of Chesapeake. That area is a close match for the Richmond suburb where the company opened its first dealership last year.
The company has been careful to say that CarMax is ``just a test,'' and hasn't released any sales figures for the dealership. Edwin Underwood, an analyst for the Richmond brokerage Scott & Stringfellow, estimates they will range from $30 million to $40 million annually.
CarMax has a no-haggle policy, and customers can use a computer directory to browse through the automobiles at the dealership. It boasts a huge selection of 500 cars and trucks.
The company's first used-car lot opened last fall in Henrico County, just outside of Richmond. Now, Circuit City is looking to build CarMax stores in Atlanta, Raleigh and Charlotte.
In Norfolk, Circuit City had eyed a $1.2 million piece of land zoned for office buildings. In its application, it asked the city to rezone the tract near Sentara Leigh Hospital for commercial use.
Circuit City withdrew its application on Tuesday, two days before it was to come up for a Norfolk Planning Commission hearing.
The withdrawal doesn't necessarily mean the city has lost CarMax, said Leonard M. Newcomb III, land-use manager for the Department of City Planning and Codes Administration.
``I think they are looking at the numbers in Norfolk in terms of car sales,'' Newcomb said.
Circuit City, the No. 1 consumer electronics retailer in the nation, has met with some difficulty in getting suitable land for its giant dealerships, said Underwood, the analyst from Scott & Stringfellow.
``All I can tell you is that it's very difficult to get zoning for a used-car lot,'' he said. ``Not everybody wants a 500-car used-car lot in their back yard.'' ILLUSTRATION: Staff color map
Proposed site of CarMax
For copy of map, see microfilm
KEYWORDS: CIRCUIT CITY
by CNB