Discount Insight: Circuit City’s Demise Feb 09
As soon as Circuit City announced its recent liquidation there was a chorus of cries proclaiming that it came as no surprise. A colleague asked if I was expecting this and I replied that the announcement came a bit early according to my timetable.
Many of those who took an attitude as if it was about time, often failed to observe the addition of 34,000 people to our nation’s rapidly rising unemployment rolls. The ‘I told you so’ contingent often seemed to take satisfaction from their lack of surprise by speculating on which of several factors most contributed to the company’s demise.
Sure there were questionable and costly real estate deals as the company sought locations by paying more attention to acquiring a bargain rather than an easily trafficked spot. When these locations proved weak headquarters, at times, decided to relocate. This often improved store traffic while it drained the real estate budget.
Probably the most visibly bad decision involved the massive release of tenured sales floor personnel in a move designed to save money and give stockholders a better feeling about the bottom line. The move was immediately exposed and shredded in the press as the shrinking corps of store personnel was often unable to keep up with the patience of underserved customers. The bottom line was further hurt as many of the best sales people had been forced to leave the company.
While these and a myriad of other issues caused stockholders to rail against the board of directors for many of the company’s latter years, it was the state of the national and world economies that planted the final nails in the company’s proverbial coffin. The current credit crunch has dried up the credit market so badly that as many as three worthy suitors were unable to obtain basic positions to acquire the ailing company. Had the credit standards mirrored those of virtually any time during the past half century, Circuit City might have been rescued. Though much maligned, Circuit City had managed annual sales in excess of $11 billion for its ultimate final full fiscal year.
The demise of Circuit City has resulted in a near panic as suppliers seek to fill a deep void left in the shadow of this multi-billion dollar market force. Chain Store Guide’s customers can rest assured as the products offered from its Discount & Specialty Retailer database are rife with retailers seeking to take up the slack left by Circuit City’s departure from the market. This includes discounters such as Wal-Mart and Target, membership warehouse clubs Costco, Sam’s Club and BJs, office supply chains including Staples, OfficeMax and Office Depot and Circuit City’s chief direct competitor Best Buy. Hungry suppliers should not overlook a number of strong and growing consumer electronics regionals including Conn’s and Fry’s Electronics. CSG also offers strong local champions such as BrandsMart USA of South Florida and Georgia and J & R Music & Computer World of New York City.
Despite the frightening economy hhgregg Inc. continues on its growth march. The company has laid claim to assisting Circuit City customers by honoring its gift cards and assisting with merchandise under Circuit City’s extended warrantee umbrella. Floridians are anticipating the rise of hhgregg which only last year opened its first Florida location to become natural heir of the departed Circuit City.
Additional good news for Chain Store Guide customers arrives in the form of a soon to be released market share report depicting the positions of Circuit City’s chief competitors in fifteen major markets. Mapping will reveal the placement of Circuit City locations in proximity to true competitive retailers from the Consumer Electronics, Discount, Membership Warehouse, Office Supply and Department arenas.