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What's Happening, CC? Circuit City Goes Chapter 11

Expect numerous "short circuit" headlines today now that Circuit City has filed for bankruptcy. The Richmond-based electronics retailer announced its reorganization petition this morning, saying that it needed protection from its creditors to assure electronics vendors that it could pay for the gear it hopes to sell this holiday season.

Debbi Wilgoren wrote up the news on our site earlier this morning, spelling out this company's distasteful prospects:

Circuit City has struggled in the face of competition from rival Best Buy Co. and others. It lost $320 million last year, its worst performance ever, and has not reported a quarterly profit since the first quarter of last fiscal year.

The company's earlier moves to cure its financial woes haven't helped. Last year, it canned some 3,500 workers--including many of its more experienced salespeople, a step widely panned by observers. And last week, it announced that it would close 155 stores nationwide, including three each in Maryland and Virginia.

Circuit City says its remaining stores will remain open for business as usual. But this would still be a good time to cash in on any store gift cards you have lying around.

Let's talk about the broader question here: If Circuit City were to go under, would it be missed? What does it add to the electronics retail universe? It can offer some good prices, but not as often as land-based discounters like New York's J&R Electronics, let alone the likes of Amazon. It doesn't provide the personalized service of a Myer-Emco or the local ties of a Graffiti Audio-Video. Like most big-box retailers, it doesn't seem to possess that much character; I don't see anybody setting a novel in one of its stores.

I don't mean to sound like I'm beating up on Circuit City--at which I've spent a non-trivial amount of money over the years. So let me rephrase that question: What should this company do at this point to set itself apart from the competition?

By Rob Pegoraro  |  November 10, 2008; 1:57 PM ET
Categories:  The business we have chosen , Tips  
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Comments

Circuit City lost me a long time ago with their lousy customer service, bait and switch tactics, and pushy salesmen. I won't miss them at all.

Posted by: koalatek | November 10, 2008 2:09 PM | Report abuse

I used to prefer Circuit City to Best Buy for hardware because the on-commission salespeople at CC actually helped you figure out what you were looking for. In contrast, the wage labor folks at BB were more interested in getting you to go away and stop bothering them than in actually selling you whatever it was you might have wanted.

However, CC got rid of the commissions and its better salespeople, so for the last few years it's been like a Best Buy with a much smaller music selection.

Posted by: tegularius | November 10, 2008 2:17 PM | Report abuse

They lost my business when they laid off their top sales people. I can't support that type of business. Frankly I am happy to see a store with that type of cost saving model go down. I read somewhere that they always struggled to keeep up with Best Buy in part because they go cheap on real estate, never selecting prime locations like Best Buy does, but not passing on that savings to the customer. Meanwhile they pay their execs top dollar.

Posted by: mb129 | November 10, 2008 2:41 PM | Report abuse

It's funny, a friend and I had this discussion a few weeks ago. I have spent less than $100 in Circuit City in the past decade because of poor service, disorganization, pricing, and smaller selection.

What they are lacking is distinction. They need to concentrate on one area and be the best at it. The unfortunate part is that most of those areas are covered by competitors. The only thing I see as a possibility is mobile/car audio and related accessories. Problem with that is that they would need "drive-in" garages to that work. I've had it done with Best Buy and I wasn't all that impressed, but they did the work. CC could build on that.

Really however, I think it's too late. They should close up shop and move on.

Posted by: lamaccountant1 | November 10, 2008 3:00 PM | Report abuse

Like many others I've spent thousands of dollars on electronics over the last 20 years or so. Maybe something on the order of $25-30k.

Here's what I've bought at CC in that timeframe: 1- 13 inch TV, 1-VCR, 1-Microwave. Can you tell that's when I was in college? And Best Buy hadn't moved in then, either.

I'm sorry to say that they've become trivial.

Posted by: kolbkl | November 10, 2008 3:05 PM | Report abuse

I've usually gone there to look for new music and movies, and if it's not one with 50 copies, neither I nor any employee there can find it even if "the computer says we have a copy".

For that reason alone I haven't gone there in months, so I'd suggest the first thing is fix their inventory control.

Posted by: Hemisphire | November 10, 2008 3:08 PM | Report abuse

ALthough the customer service is a big disappointment, I found the CC website to be much more informative than Best Buy. CC online was much more informative about TVs when I was looking for one last year. Also, CC had web reviews provided by users that were much more informative than anything on Best Buy's site - which was one big unhelpful commercial with very little actual information.

Posted by: EconGirl2 | November 10, 2008 3:17 PM | Report abuse

I think CC is pretty darn useless, certainly since they jettisoned appliances about 6-7 years ago.

Wasn't the real turning point the DIVX debacle of the late 1990s? CC, if I recall correctly, had sunk a fortune into a proprietary system of disks that could be used only for a brief period without further payment (and required special players as well). Of course, standard DVDs for home purchase (or rental) won out in the end.

Posted by: remulac | November 10, 2008 3:20 PM | Report abuse

They have no niche. What they should do is establish themselves as having the latest and greatest technology, or lowest price, or widest selection or something. Right now, they are just a store full of electronics.

I really think the Sonys of the world, with their price-fixing have made the world tough for CC. They can't lead on price because of the manufacturer rules, so they should find some other avenue. I'd almost be ready for a "trade-show" kind of feel, where they rent space out to several manufacturers where the manufacturers can control display and price. They might actually attract some kind of interest that way.

Posted by: Section315 | November 10, 2008 3:23 PM | Report abuse

I saw only one Circuit in around our area in prime location and that is in Sterling. Unfortunately, Target is next door and it probably hurts some of their business. All other Circuit City's I've seen in Beltsville, Rockville, Leesburg, Fredrick, etc are located in either non-prime locations or they kind of facing away from street.

Also, they seem to have a business model in between specialized (Myer Emco) and Large Box Stores (Best Buy, Taget, Walmart, etc). That just doesn't work out when those stores are located few blocks from you.

Posted by: spolina | November 10, 2008 3:24 PM | Report abuse

They were only good for keeping Best Buy a bit honest. Their inventory control sucks, they have wage slaves who know nothing roaming the store, and the chief executive is more worried about hiring ex feds to protect his sorry butt from all the people he fired.

Posted by: theobserver4 | November 10, 2008 3:24 PM | Report abuse

There is a place for brick-and-mortar stores. Unfortunately for them, a lot of customers (including myself) consider that place a location to go look at something before you buy it cheaper online. I've even stopped doing that out of guilt.

Unless it's open-box or some crazy clearance item, I have yet to see Circuit City, Best Buy or any other brick-and-mortar beat Newegg.com on anything at all. Tiger Direct can't always compete with Newegg, but is still cheaper than the retailers.

On top of that, Newegg has a wider selection and their customer service is top-notch. They're an online-only retailer and I can talk to an actual person on the phone easier than I can calling my local retail stores.

Barring the three day shipping wait, the ONLY reason a retail store can justify charging more would be customer service (overhead like rent/electricity/etc is largely irrelevant to the consumer). When the online retailer beats your in-person customer support with their phone & live-chat support, your reason for being is nullified. Both Newegg and Tiger Direct beat Circuit City and Best Buy hands down in my opinion. Good riddance.

Side note - No, I'm not heartless and do feel for those that may lose their jobs as a result of this. My comments are addressed at the upper management of those places who fail to come up with a business plan to keep them competitive. Those that will be unemployed are innocent bystanders and deserve better...especially the aforementioned experienced salespeople.

Posted by: hokiealumnus | November 10, 2008 3:29 PM | Report abuse

They recently OPENED a new store in Fairfax, in the spot where Tower Records closed. Arrgh, probably the worst/smallest section of music CD's ever. Stark contrast to large varied selection at the old Tower, may they rest in peace. CC gave me the message that they don't give a darn about music, just throw some stupid best sellers in there and hope you buy big TV's instead. Sad. I spend more on music "software" than I do on hardware. That is, I'll buy a new component or tv once every 15 years, but I buy music (in full resolution, not MP3's) every week forever. Who caters to that now? No one?

Posted by: ClarkKent1 | November 10, 2008 3:40 PM | Report abuse

I’ve purchased a handful of items from CC over the past couple of years, and always prefer them over Best Buy. My experiences at Best Buy have been 1) that the “sales” people are not at all knowledgeable about the item they are supposed to be helping you with and have no desire to find someone who can help you, and 2) that they return policy is draconian. I was and am all for CC getting rid of the commission system for its sales people; I always hate when the focus is as much or more on up-selling rather than getting the right product for my needs. That said, I think they would be better served by employing fewer, but highly paid salaried salespeople to work the floor. Considering that most salespeople wander about most of the day anyway, it would be a more efficient use of payroll, allow CC to keep their best people and give the customers a great shopping experience. At the same time, they should embrace a more client-centered return/exchange policy, much like Costco, etc. As it is now, I’m more inclined to buy there because I know I can return the product easily and with no hassle if it doesn’t fit my needs. Good luck, CC.

Posted by: bfehrman | November 10, 2008 3:49 PM | Report abuse

Great Parliament title. Not bad for a white guy.

Posted by: Snakeheader | November 10, 2008 3:54 PM | Report abuse

I remember getting stuff at Dixie HiFi which either became or was bought by Circuit City, but like most others here, I haven't used CC much for awhile. Seems like if there was a niche, somewhere between Myer-Emco and the big boxes, Tweeter tried to fill it, but aren't they in financial distress, too? I only shudder at the recollection of how bad Home Depot got as soon as Hechingers went out of business.

Posted by: zekepeterz | November 10, 2008 4:19 PM | Report abuse

I bought electronics at Circuit City. I even owned stock in the company, and made a decent profit on it. (We're talking a few thousand, not hundreds of thousands -- I'm working class.) But that was during the early 90s. I haven't been back, and WOULDN'T go back on principle, because of the way they fired their highly paid salespeople.

I'm glad to see that CC will be going BK (and that's the inevitable outcome.) The company typifies the American business model -- screw the workers, rip off the customers with crud like extended warranties, and enrich the people at the top. Sure, the stores will close, creditors will get shafted, the scabs who replaced the sacked salespeople will be out of a job.

But the thin crust at the top will have creamed off multi-million-dollar pay packages. Their golden parachutes have been deployed. They won't have to work another day in their lives. They don't care. This is the new paradigm in America -- run it into the ground and live off what you stole on the way down. In fact, with the Bush Crime Family, that is the new paradign FOR America.

Of course, I don't have to care because I moved out of America three years ago. They do it better here in Australia. If I ever hear of mobs burning the houses of crooked corporate executives, and parading bankers' decapitated heads around on sticks, I'll move back to join the hunt.

Posted by: Bukkonen | November 10, 2008 4:44 PM | Report abuse

> What should Circuit City do at this point to set itself apart from the competition?

Die.

-- faye kane, homeless brain
See more of my smartmouth opinions at http://blog.myspace.com/fayekane

Posted by: FayeKane_HomelessSmartypants | November 10, 2008 5:26 PM | Report abuse

It's not a surprise that this retailer is about to bite the dust. There level of cutomer service is terrrible. I've had to write repeated letters to get a $103.00 refund on an incorrect billing, all to no avail. If the averager customer is treated like I have been, then good ridance to this retailer.

Posted by: reachglass | November 10, 2008 5:34 PM | Report abuse

I would be sorry to see Circuit City go out of business, but the last time I made a significant purchase there was ten years ago. When I bought a large analog television and a desktop PC in the 1990s, I picked them up at Circuit City, and Best Buy would have been a good alternative.  The television turned out to be a lemon, and it was easy to exchange it for a working model. Likewise, returns of bulky items would be easier and cheaper in person than by shipping.

But times have changed. When I bought a laptop computer last year, I bypassed the local stores and bought a Sony model from Amazon.com, which was quick and easy.  I have also bought a DVD player and a digital camera from Amazon.com and would do the same for any lightweight electronics.  I shop by brand and appreciate the convenience of ordering online and having the product delivered to my door.

I rely on the Internet for product information, so I am not too concerned about having knowledgeable sales people in stores. I am usually satisfied if the sales person is courteous and points me in the right direction. Store directories can be helpful too.

If I were going to buy a flat panel television, I would prefer to go to Circuit City or Best Buy. But the bulky big ticket items are probably not enough for them to survive, especially in this economy.

I've become used to warehouse shopping, and Circuit City and Best Buy continue to be convenient as warehouses for picking up, exchanging and returning bulky merchandise.  But this business model that continues to work so well for Home Depot, IKEA, Office Depot, etc. may no longer work so well for electronics.

Posted by: RossEmery | November 10, 2008 7:10 PM | Report abuse

I went into a CC store for the first time in years about a month ago -- was killing time before a movie -- and remarked to myself how they had absolutely nothing that peaked my interest. I was interested in pricing external hard drives. The only one that I was interested in was out of stock while the no-name brand was so numerous that it was falling off the shelves.

That about sums it up for CC for me. They don't carry anything of interest and try to get you to buy knock-off and second-rate products.

No tears here over their down-fall.

Posted by: Annorax | November 10, 2008 7:53 PM | Report abuse

I'm a regular electronics buyer, but the last three times I've been to Circuit City, they haven't had what I want (external HD, router and something else) in stock, even though the website and the inventory computer said they had several for sale. What's the point of going to a store if they don't have what I'm looking for?

For the external HD, I ended up going online, found it at Newegg and had it in two days for half the price of Circuit City.

Posted by: Alexander6 | November 10, 2008 8:17 PM | Report abuse

I haven't bought electronics at a brick and morter store in maybe 10 years. I'm not even sure there's a CC anywhere near my house. This is kind of like lamenting the loss of livery stables 100 years ago.

The only constant in the universe is change. Adapt or perish.

Posted by: foxn | November 10, 2008 8:24 PM | Report abuse

I was expecting a P-Funk article? I've been playing the song continuously since Obama won..He still has time to select Stevie Wonder to the post of Secretary of Fine Arts.

Posted by: ceo1958 | November 10, 2008 8:44 PM | Report abuse

I have purchased 4 Canon and Kodak cameras for different people there in the past 3 years, and they have had the best prices. I like their website because of the feedback and ratings. I hope they won't be gone. I purchase DVDs from their website as well as the store. I think they are superior to Best Buy -- you have to know what you want, of course, to enter the doors at either of these stores. Sorry to hear the news today. Sad economy. Sad times in the U.S.

Posted by: rjrjj | November 10, 2008 8:47 PM | Report abuse

They've been dying for a long time...time to stick a fork in it. Not only were they the pits in customer service, many of the stores were really dirty and grungy.

Posted by: tbva | November 10, 2008 9:02 PM | Report abuse

Everybody in retail knows that buying paradigms shift every so often, and the writing is usually always on the wall. You ignore it at your peril. Look at all the "catalog merchants" (the Service Merchandises, Best Products, etc.) of the 1970s and 80s. Those were THE hot retail outlets, and now they are extinct. Even Sears, the original catalog retailer, basically exists as a retail store backed by a hedge fund.

So that's part of it. I don't know who remembers that Best Buy suffered to the brink of peril because of massive overexpansion, but they retooled their operation and now they're taking names. The range of products that BB and CC carry are basically identical, so there must be something internal to CC that is causing them a massive inefficiency.

Speaking as an electronics junkie, their stuff is very run-of-the-mill, and the few top-end pieces they do carry are priced way out compared to most e-tailers. For example, my prosumer camcorder was $1500 at CC and $899 online. Guess where I bought it.

One of the managers at a store I will refer to as "Tweeter-Emco" admitted that those stores don't make a lot of money on item sales; they're making it on installs and service plans. I didn't have any problem drilling a TV mount to the wall, but on my block, I seem to be the minority. But if I were going to pay for an install, I don't think I would use CC over Tweeter-Emco unless the price difference was spectacular, because I don't consider CC to have specialty product knowledge. (Nor T-E, but that's a different story.)

Posted by: info_stuporhighway | November 10, 2008 9:06 PM | Report abuse

I loved Circuit City and then a few years back they fired everyone who was good at the store who I had known for years and all they had were idiots working there and after one day there with a bunch of uneducated immigrants and ne'er-do-wells who were incapable of helping me, I never returned.

Posted by: bbcrock | November 10, 2008 9:23 PM | Report abuse

Hmm... do you see a pattern here?

Lousy customer service. Poorly managed stores -- in some, I felt like I was intruding on their personal gossip time. And they were king of the bait-and-switch. In the past few years, I have gone elsewhere, even if paying a few dollars more, to avoid this place.

No great loss. There is still plenty of competition.

Posted by: rpike | November 10, 2008 9:39 PM | Report abuse

Let's not lose sight of the fact that Circuit City has been getting hammered for years. Best Buy offers better pricing, selection and service in a physical store and Internet stores offer infinite selection and better prices. This is just another example of a bad company that can't survive a downturn.

jmanley

Posted by: saleboutique | November 10, 2008 10:18 PM | Report abuse

Myer Emco sold out and is no longer local. Sales staff has gone down hill and are rude an useless. Worst Buy is awful.

Big Screen Store has great service and sales staff.

best place for audio and home theater is Gifted Listener in Centerville, VA. Tom Unger the owner is great. Tubes and turntables rule.

Posted by: omarthetentmaker | November 11, 2008 10:36 AM | Report abuse

The only thing that will help them is customer service. Lord knows Best Buy doesn't have any, and that starts at the top with Brad Anderson and his adherence to the angel/devil customer theory (Google it).

CC needs to do whatever it takes to get knowledgable staff who are willing to help a customer in whatever way possible. Case in point - I was given a Canon Digital Rebel body, but no lens. I went into a CC store to see if they had a basic 18-55 lens that would fit and the kid who eagerly asked "can I help you?" didn't have the foggiest idea what a digital SLR was, had no awareness of the inventory, and basically was useless. So I guess the answer to his question was "no, you can't." And as all retailers should have learned from "Miracle on 34th Street" the really correct answer would have been "we don't carry that, but you can probably get it at Richmond Camera." Lose the sale but win the customer.

Posted by: larrymac | November 11, 2008 11:35 AM | Report abuse

I agree with two of the other posts already here...CC has been going under for a long time. BB came onto the scene with one of the greatest stories in business marketing history...first of all their name itself is a psychological mindscrew to get the consumer into the store just to see if they indeed have the B___ B__.

Unless CC put MAJOR dollars into their marketing, let alone their customer service, they couldn't hope to stay afloat against that. BB, in my opinion, doesn't even live up to it's name anymore (if they ever did). This is a case of ignoring the other guy until they become too big and then they take you down.

By the way, I don't shop at either store...I do it online.

Posted by: graphixgeek | November 11, 2008 2:11 PM | Report abuse

I, too, can report my share of bad experiences with CC, though I have also had some very positive ones as well, especially before the Schoonover era. But you asked for ideas of how they can differentiate themselves from their competition.

So here's my idea: a brick-and-mortar match for buy.com, woot.com, or overstock.com

The idea is simple: not everyone needs or wants this month's newly introduced mobile phone, HDTV, or laptop. There's a big market for the 2.4 GHz laptop after the 2.6 is introduced, especially if the price is right. Mobile handset manufacturers introduce new phones every quarter. While we early adopters are out there drooling over them, the vast majority of the public doesn't know the difference, and just wants something at a fair price that will work reliably.

There's another benefit to keeping such a CC alive. It's often nice to see and touch the merchandise. A digital SLR has a certain heft and balance that you can't check with an online store. No one wants to pay for a return shipment or a restocking fee because the item doesn't feel quite right.

Posted by: bluevoter1 | November 12, 2008 1:15 AM | Report abuse

Does Micro Center equate here ???

Posted by: brucerealtor@gmail.com | November 12, 2008 1:37 AM | Report abuse

I have been wary of Circuit City since they lost a printer I took in for repair years ago and later balked at accepting a returned defective item with the receipt. I would miss it as much as I do CompUSA -- not at all.

Posted by: query0 | November 12, 2008 7:55 AM | Report abuse

There is room in the marketplace for Circuit City, we need the competition in the marketplace. I believe someone else mentioned this in an earlier post, Circuit City needs to find its niche, whether its just specializing in TV and Home Theatre or Home Appliances.
Without a good business plan they won't have much of a chance in the marketplace after they resurrect themselves from bankruptcy, especially if try and sell the same selection of goods that they carry presently.

Posted by: Rcichocki | November 12, 2008 11:37 AM | Report abuse

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