Electronics retailer Circuit City has announced it is closing 155 stores, resulting in layoffs for almost 20% of its employees. The company blames a weak consumer economy and tight credit as constraints that have left it exploring all available options to keep the company afloat. Despite closing stores, Chapter 11 bankruptcy is still a possibility in the near future.
What went wrong? Circuit City has suffered the same problem that many also-rans encounter: lack of a distinctive brand position. Best Buy has excelled in the areas of product choice, customer service, and employee satisfaction. Wal-Mart has mastered the low price position. Amazon.com has product selection and customer interactivity as key strengths. Circuit City simply does not stand out in a competitive landscape.
Circuit City has not helped itself in the court of public opinion. In 2007, the company collected heaps of negative press for a decision to let go more experienced, higher paid store employees and offer to rehire them… at a lower salary rate, of course. Also, negative customer sentiment is abundant on the Internet. The search term “Circuit City sucks” returns many web sites and blogs at which Circuit City customers share bad experiences they have had. Lack of a solid brand position, coupled with lack of a good reputation for customer service, leaves Circuit City in a fight for survival.
Link: Reuters – “Circuit City to Shut 155 Stores, Mulling Options”
Does anyone remember that Circuit City, just a few years ago, was the best performing company in Jim Collins’ book “Good to Great”? Obviously, Mr. Collins’ approach to management is worth some reconsideration given the fall of Circuit City. It would seem a new approach to management would be worth considering. Read more at http://www.ThePhoenixPrinciple.com
I’ve never been a fan of Circuit City. I’ve never lived near one, so I’ve never shopped at one. Whenever I do go shopping for electronics, I always go to Best Buy. It’s the place that I think of first for electronics. Honestly, I’ve never been inside a Circuit City, so I couldn’t tell you about my experience there as a customer. But I can see why they would be shutting down all those stores. They’ve just failed at establishing a strong name. As for those people that are being laid off, that’s terrible. And those people that were fired and then offered their jobs again at a lower price…that’s despicable. I would not return to that job if they did something like that to me. Circuit City needs to attack competitors to bring themselves back in the limelight.
I am a Best Buy person myself. I have had only a couple of instances where I couldn’t find a product from Best Buy, and the employee (on both occasions) suggested that I try Circuit City. Of course, they did not have the item that I was looking for. I find that they just don’t have a broad variety of products like some of the other stores that were mentioned (Best Buy, Wal-Mart, Amazon). This makes it hard for them to stay afloat because over time consumers start to recognize this. Why would I go to Circuit City to buy a cd when Best Buy and Amazon are guaranteed to have it, and it will be cheaper at Wal-Mart? I have three great choices before I get to Circuit City…it is always the last resort, and I think that is the problem.