Circuit City Closes Up Shop Once and For All

By  |  Friday, January 16, 2009 at 10:11 am

Circuit CityIt’s hardly surprising, but now it’s official: Troubled consumer-electronics merchant Circuit City has failed to find a buyer and will therefore be liquidating all its stores. It’s lousy news for its more than 30,000 employees, its stockholders, and anyone who was a fan of the chain, which started with a single store six decades ago.

Even if the U.S. economy was in better shape, the odds were against the company–and, for that matter, anyone else who tries to operate a big chain of electronics stores. Far more of them have folded over the years than have ever been viable businesses. Running successful retail stores is by definition really hard, and the intense price competition among gadget sellers makes squeezing out a profit incredibly tough.

Even so, Circuit City’s death strikes me as largely self-inflicted: For too long, its stores were joyless places with limited selections, uncompetitive prices, and mediocre customer service. It even had an organized program to fire staffers who were experienced enough to know what they were doing and replace them with clueless, low-clost newbies.

With Circuit City’s imminent disappearance, the country is really left with only one nationwide full-service electronics chain, Best Buy. It’s long played Gallant to Circuit City’s Goofus, and should ride out the recession in decent shape. Other electronics purveyors are specialists (RadioShack), generalists with an electronics department (Wal-Mart, Target), regional (Fry’s, the current incarnation of CompUSA), or willfully limited in number of locations (Micro Center). Or, of course, completely virtual (Amazon.com, Buy.com, etc., etc., etc.).

Among the reasons I wish that Circuit City had made it is this: It would be a lot better for consumers if there were at least two strong national chains competing to win customers through broad product selection, low prices, and decent service. Best Buy has enough competition and challenges on other fronts that I don’t expect it to grow too fat and happy, but it no longer has to worry about its most direct rival.

Of course, if Best Buy’s management is smart–and it is–it’ll continue to run scared. Jim Collins’ business bestseller, Good to Great–published in 2001–lavishes praise on Circuit City as one of the country’s best-run companies of any sort. It took Circuit City only eight years to go from glory to death. Bottom line: Best Buy could be dead in a decade too, if it doesn’t make its customers happy…

 
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7 Comments For This Post

  1. KeithF Says:

    They should be running scared. Amazon is much more relevant competition to Best Buy than Circuit City has been for several years.

  2. Charles Forsythe Says:

    I had a Circuit City next to my office, and it was convenient when I wanted to buy something at an “OK” price and I didn’t want to bother driving to Fry’s.

    Ultimately, when I made a big-ticket purchase last year (DLP HDTV), I looked at models there, found one I liked, and bought it for 40% less online. I don’t see how Best Buy hasn’t succumb to the same doom, but we’ll see.

  3. Spot Cool Tech Says:

    I feel badly for the people who are going to loose their jobs, but Circuit City always struck me as having TERRIBLE service. Maybe in 2001 it was a well run company behind the scenes, but I never enjoyed going into their stores.

  4. David Worthington Says:

    They used to have a GREAT selection of audio products. But big box stores have such high overheard that it was inevitable that one would succumb to the Web.

  5. Shawn Roberts Says:

    Circuit City has never seemed like a worthy competitor to Best Buy for the reasons listed above relating to prices, service and lack of selection. However, I enjoy and value being able to touch actual products and CC was a venue to do this in that was superior to Walmart. For this reason and others, I am sad to see it go.

  6. Benj Edwards Says:

    I literally had to wait 45 minutes to buy something at my local Circuit City last year. That store has 5 checkout lines. Every time I was in there, none of them were open, and they only checked out through customer service. I was one of three customers in the store. The bar code on the Indiana Jones DVD I wanted wasn’t in their computer system, so they spent forever doing who-knows-what. The only reason I waited so long is because I had a gift card that I obviously couldn’t use at Best Buy. I managed to finagle a minor discount out of my long wait, although they should have offered it first. I never went back.

    Bad management trickles down from the top; with what I’ve seen, it’s no surprise that they’ve bit the dust.

  7. Dave Mackey Says:

    What I’ve bought at Circuit City in the past year: A USB cable and two Nexxtech hard drive enclosures.

    What I’ve bought at Best Buy in the past year: a Macbook Pro, a Hewlett Packard notebook, a Denon stereo receiver and speaker system, a Samsung Blu-Ray player, games for my stepdaughter’s Wii, and various DVD movies.

    However, Best Buy better watch its back: as Internet shopping becomes more the mode, brick and mortar is in danger of becoming extinct. Who needs 30,000 people who don’t know what they’re doing however many hundreds of Circuit City stores there were when you can drive the same sales with a staff of about 100 CSR’s and warehouse people working out of maybe five regional locations? Circuit City should have seen the writing on the wall with the failures of the two dominant New York electronics chains of a generation ago, The Wiz and Crazy Eddie.

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