Monday, November 10, 2008

Lights Out For Circuit City?


I'd first like to apologize to my readers for a long delay in updates around here. I've recently begun experimenting with other ideas here and abroad while being generally busy and unable to travel much while the retail world shows continual slowdown. As you know, The Caldor Rainbow is dedicated to mostly that of on-site reporting and photography in the realms of focuses over the past couple years. Just to let you know, even when updates are slow, I read all your e-mails (even ones the spam blocker throws aside), page comments and appreciate input on all of our pages.

News that piqued my interest as of late was that of what our fellows at Labelscar (and most of the retail sphere are) bringing about -- the impending downfall and drudge of big box electronics retailer, Circuit City -- who seems to be just another but one of the big namers to soon engulf in darkness. Thus far, the 2008 year has been rough for the retailers with a year full of turmoil -- from a troubling economy in part due to rising essential costs that have been squeezing everyone (gas; which has remarkably fallen to two and a quarter as I write this). It's not all the economy though, on the upside, its competitor Best Buy has been doing quite well. Other fellow electronic-centric retailers like CompUSA, which pulled out of many markets, became decimated to just 23 stores and as an online outlet.

Last week, The Consumerist broke the news of Circuit City closing of 155 stores nationwide; with only one store, in Orange, closing in Connecticut. The Constitution State held the fewest hit with closings with one of the ten surviving stores -- evidence now suggests soon may follow in the near future. The company's far-reaching ones on the Westcoast like Arizona and California got whacked while some other (smaller) markets held onto its share.

Just today, Circuit City announced its falling into the quicksand of retailing; Chapter 11 in addition will cut 700 jobs. Few retailers ever find solace from the doom, and even when they do, it never extinguishes the possibility of failure like late retailer Bradlees, who fell shortly after its own recovery.

Critics said this moment was bound to come -- not because its category rival Best Buy has been outselling and marketing the second-tier electronics retailer but because of a much ballyhooed, controversy whereby the company axed 3,400 "overpaid employees" in early 2007. Editorially, this inept move from former company CEO Phillip Shoonover seems to have delivered the company's karmatic blow.

Self-proclaimed consumer warrior and radio personality Clark Howard discussed and addressed the Circuit City issue more eloquently than I could have on his November 4th show (link directs to free MP3/podcast download). Clark would naturally have you stray from "extended store warranties" anyway but now more than ever, we urge our readers caution.

To be frank, I've never really shared a customer bond with Circuit City as with other retail stores in past and present, and have preferred Best Buy (though I have plenty issues with their company policies, employees) but pop in there every now and then and am often surprised at their odds and ends and discounts. When the company made that fate-breaking, despicable move to fire its experienced, loyal employees (and thinking it would be a good idea to do so), my demeanor of their company model has been nothing less than of dour and disdain.

For more on Circuit City, check out the Consumerist's "Death Watch" timeline.

As with all retailers, I hate to see failure even when a company makes a grave error as it did with CEO Shoonover. Furthermore, will you miss Circuit City should they go? Where did they go wrong? Share your thoughts.

Title image: Trumbull, Conn taken by The Caldor Rainbow.

12 comments:

Dwayne said...

Circuit City just is a terrible place to shop. No cashiers just the customer service desk... meaning to purchase an item you have to wait on people returning items too. Then theres their poor selection of Cd's their selection is fewer than WalMart's & that goes for the DVD's for the most part. Why shop there when usually Best Buy is across the street?

Kendra said...

I've been in my local Circuit City maybe a total of three times, and Best Buy not much more than that, as I buy most of my music/movies/video games at smaller chains such as Bull Moose Music and Newbury Comics. However, I will occasionally buy electronics-related items that I need in Best Buy, whereas the most recent purchase I recall making at CC was in 1998! I'm not at all surprised that they are having difficulties, but I AM a bit surprised that their store up here has managed to stay in business! Maybe it has more customers than meet the eye? Who knows!

greg8370 said...

WELCOME BACK NICK...thought you'd be back with Linen 'n Thimgs however

Panda said...

First of all, welcome back, Nick! Lots of us retail fans have missed you tons! That said, I think it's a shame Circuit City is in such terrible shape. I actually thought they were pretty cool, and I got quite a few things from them over the years. More specifically, I would get things I could use to upgrade my computer, such as sound cards. I know quite a few don't feel the same way I do, but screw it; I'll miss Circuit City.

Pepe said...

The Circuit City up here near the "Shoppes at Buckland Hills" has always been the last stop for electronics. Even before Best Buy bought out the Media Play right next door, most people I knew went elsewhere to get movies, cds and electronics. The store here has angry employees, employees who do not care, a sparse layout, a poor selection and prices that are usually double any other stores.
I think that Circuit City is the victim of an overcrowded market, and they failed to progress along in a timely fashion.

Mark said...

Welcome back

As for Circuit City I will sure miss it if it does go under,it certainly won't be the same. But more so it would be a big blow for the Torrington Fair shopping plaza, because they recently got a brand new Circuit City in place of the Sears Hardware that just closed down. If Circuit City goes out of business then that spots empty again for a couple of years. It would certainly not be good.

Jonah Norason said...

You never answered my email about the site layout or the Toys R Us. Great post, though, but I think Mervyn's is the biggest loss so far. Oh wait...that's in the West Coast.

JJ said...

I worked at the Circuit City pictured in your article for over 3 years. This was when the company was still settling into the state, and things were still running well. What people forget is that the firings in 2007 was the *second* time the company did it.

The first time was when they moved away from a commission format to an hourly format in 2003; those reps who were earning too much (in other words, the ones who were selling the most) were considered too expensive to keep. Not as much damage was done by that round of firings, because only about 10% of the old reps were let go, and many of the remaining ones took the hourly offerings, even though they were a percentage less than their average commission results. That was when I started having trouble supporting the stores anymore - good friends of mine who were still there lost their jobs.

The shift from commission to hourly reduced the loyalty of the employees, and over time I saw an erosion in quality. Some good people remained, but largely they were replaced by people there for the paycheck and the discount.

Except for the new store they opened in Milford, I've never been all that impressed anymore when I walk inside. Best Buy has aggressively kept modifying their stores, while the gray/maroon colors of Circuit City just seem drab and the store is just not as inviting. The selection, especially on computers, has been wanting for awhile.

Jonah Norason said...

Circuit City is done with! Finished! Kaput! Another wing has been added in the huge mall in the sky...anchored by Mervyn's, with Steve and Barry's, Circuit City, and Linens N Things as junior anchors.

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