Top 10 Reasons Circuit City Will Go Out of Business

Short-Circuit City

You can file this one under the “kick ’em while they’re down” category.  Sorry.

10.  If it ain’t broke, fix it anyway.  During the ’90s, Circuit City was doing great.  The problem was, competition was coming and it was coming hard and nobody took Best Buy seriously.  If you don’t crush the competition, don’t be surprised when they crush you.

9.  In a competitive environment, don’t take your eye off the ball.  DIVX and CarMax were major distractions and Circuit City suffered greatly as a result.

8.  In 2003, Circuit City fired thousands of employees and ended commissions for sales people in favor of an hourly structure.  In 2007, Circuit City fired 3,400 of those hourly workers for cheaper replacements. When you fire well-paid veteran employees to make room for less-experienced, lower paid workers, your customers will notice.  And they won’t like it.

7.  Location, location, location!  B locations equal B customers, B sales, B results.

6.  Don’t notice too late that people want to buy movies, games and music when buying the hardware to play them.  Those low margin items helped create brand loyalty for Best Buy.

5.  Old, outdated stores need to be remodeled or closed and new, bigger ones need to be opened in competitive markets.

4. Selection and availability of hot products is crucial.  If you don’t have what I need, Best Buy, Target or Walmart will.  And next time, I will probably go there first.

3. Give customers a “real” rewards program.  Not just a come-on for a branded credit card.

2. The state of “customer service” in retail America is abysmal.  You can tell very quickly when you walk into a store that the employees couldn’t care less.  Circuit City’s reputation for customer service was far less than stellar.

1.  Filing for bankruptcy 16 days before Black Friday is an extraordinary event that no consumer can ignore. With consumer confidence non-existent and retailers fighting for every sale, you may as well just shut the chain down now.

I am very sorry for all of the employees who have or will lose their jobs in Circuit City’s meltdown.  My thoughts are with you.

UPDATE:  Since I posted this in November, I’ve begun rooting for Circuit City and was hoping it would find a buyer.  The cost of going out of business to its employees, suppliers, etc. is tremendous.  The loss of competition will surely cause competitors (Best Buy) to raise prices and worry less about having a wide variety of items to sell.  Unfortunately, my prediction came true today.  I’m very sorry for those affected.