Print 79 comment(s) - last by exanimas.. on Nov 14 at 6:00 PM

Closing 155 of its retail locations wasn't enough to prevent bankruptcy for Circuit City

The state of the global economy and that of the U.S. economy are making things difficult on many companies in the U.S. as sales fall and credit terms tighten. Consumer electronics retailers and computer manufacturers are among the companies that are feeling much of the economic pressure.

One of the biggest retailers to find itself in a serious economic crunch is Circuit City. The consumer electronics retailer announced today that it is filing for Chapter 11 bankruptcy to protect itself from creditors after cash flow problems began to prevent it from completing its turnaround efforts.

The bankruptcy filing is far from the first sign that the electronics retailer was suffering. Circuit City announced just last week that it was closing 155 of its stores across America. The massive store closures would eliminate 17% of Circuit City's U.S. workforce.

Reuters reports that out of the last six quarters Circuit City has reported a loss in five of them. The consumer electronics leader is Best Buy followed closely by Wal-Mart according to Reuters. Losing the competition posed by Circuit City in the markets where its stores are closing would at a glance seem to be a good thing for other consumer electronics retailers.

However, Circuit City is having massive liquidation sales at the closing locations that could prove to be a big problem for Best Buy – at least in the short term. In the beginning stages of the liquidation sales discounts at Circuit City are said to be at least 30%. As time goes by and the stores get nearer to closing, the discounts will only get bigger. The discounted merchandise could pull important holiday shoppers from the more stable electronics retailers into closing Circuit City stores.

Analyst Dan Binder from Jefferies & Co told Reuters, "Longer term, you've got Best Buy, who's dominant in the sector, taking share. But in the short run it could feel the pain of the liquidation activity."

Filings from Circuit City for Chapter 11 showed the company had $3.4 billion in assets and $2.32 billion in debt as of August 31 with more than 100,000 creditors. Circuit City first started to consider closing stores in October. At the time the Wall Street Journal reported that the closing of the stores was an attempt to stave off Chapter 11.

Only a few weeks later Circuit City announced on November 3 its plans for closing the 155 stores across the country. A big factor in the decision to file Chapter 11 was the fact that Circuit Creditors had tightened credit terms extended to the retailer considerably. Some creditors were even requiring upfront payments before shipping goods.

Circuit City CFO Bruce Besanko wrote in a court filing, "In large part, a Chapter 11 filing is due to three factors, all of which contributed to a liquidity crisis that prevented the company from completing its turnaround goals outside of formal proceedings: erosion of vendor confidence, decreased liquidity and a global economic crisis."

Best Buy had said previously that it would consider taking over locations that rivals closed. There is no word from Best Buy on whether it will take over any of the Circuit City stores that are closing.

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Thank goodness for...
By MrBlastman on 11/10/2008 10:17:46 AM , Rating: 5
Fry's, NewEgg and the internet - if we didn't have those, we might be forced into spending our money at Worst Buy. I am truly saddened to see Circuity City file for Bankruptcy. Another sad day for the American Consumer.

However, it really is our fault when you look at it. We decided Circuit City should go bankrupt with our wallets... Lured in by the shiny promises and flashy salespeople at Worst Buy. Circuit City just failed to adapt - it is hard though to adapt once you have a huge empire and sales decline precipitously; the fixed costs begin to add up fast.

Newegg, Fry's - you are more important than ever before now. Please don't let us down. Don't make us join... the blue side.

RE: Thank goodness for...
By Wagnbat on 11/10/2008 10:20:48 AM , Rating: 5
Fully agreed... Though it is survival of the fittest.

RE: Thank goodness for...
By Hiawa23 on 11/10/2008 4:11:50 PM , Rating: 2
I don't get the Best buy hate. I have always bought my electronics there, always bought my Cds there too, & have had nothing but great service. The elctronics that I have the Protection plans on they have always fixed my product & recently they couldn't fix my HDTV so they replaced it. I am more of a guy who likes to go to the store & look at stuff before I buy but I also buy from Newegg, & online stores. I just like having the best of both worlds, but bashing one over the other reminds me of the videogame fanboys, which I stay away from. You can a bad experience at any store, but I don't hold the entire chain repsonsible for issues like that.

RE: Thank goodness for...
By inperfectdarkness on 11/11/2008 10:07:04 PM , Rating: 2
don't forget play n' trade, gamestop, etc.

i RARELY buy games new anymore.

fry's should snap up circuit city stores like tiger-direct snapped up comp-usa. there isn't enough market for more than 2 big-box retailers anyway. electronics focused business isn't as capable of supporting nearly as many storefronts as department stores, home-improvement, or even bookstores.

honestly--about the only things i "might" buy at worst buy are music & movies--both of which i can get cheaper elsewhere. i bought my tv at target because of an awesome sale. there really isn't much ANYONE needs worst-buy for--unless you're absolutely desperate for "same-day" products. you pay for it with crappy selection & high prices.

i swear, i saw notebook ram on newegg selling for 40% of what worst-buy was selling it for. at a HIGHER speed than worst-buy had.

RE: Thank goodness for...
By Spivonious on 11/10/2008 10:21:54 AM , Rating: 5
Circuit City, at least at my local store, always had the worst possible service. It took two people actively searching for an employee for over 30 minutes just so I could ask a question about a 5.1 receiver. Either they're severely understaffed, or the employees just don't care.

I'm not saying Best Buy is better (it's not) but poor service was the reason Silo went out of business. It was only a matter of time for Circuit City.

RE: Thank goodness for...
By joeindian1551 on 11/10/2008 11:56:29 AM , Rating: 3
I've had good & bad experiences at Circuit City.
C.C. opened up a store about 2 years ago close to my hometown and it's great. It looks like your typical Best Buy. Employees that know what they're selling & a large selection to choose from.

I recently moved to SoCal and visited the C.C. here and it was the worst electronics store I've ever been to. Couldn't find anyone to work a register much less anyone to answer a computer question I had.
I went once and that's all it took. Newegg has gotten my business ever since (the 1 day std shipping doesn't hurt).

RE: Thank goodness for...
By BladeVenom on 11/10/2008 12:21:28 PM , Rating: 3
My experience has been that Best Buy has the worst customer service, and the rudest managers of any store I've ever been in. I'll always choose Circuit City over Best Buy, well at least until they close shop.

RE: Thank goodness for...
By Oregonian2 on 11/11/2008 11:04:52 PM , Rating: 2
I had better experiences with Circuit City employees than with the others -- or at least before they fired their experienced (higher paid) workers to save money a couple years ago.

RE: Thank goodness for...
By exanimas on 11/14/2008 5:57:47 PM , Rating: 2
Bingo. They fired all of the employees that "made too much" to hire a bunch of people for much less in their place. If you make crap money, you're not afraid to be fired and have no motivation to excel at your job, unless you're one of the few hard working people left out there. So they saved some money since they did it, and now look where it got them.

Most of the complaints on here about Best Buy / Circuit City are about how much the employees suck, so maybe it would be worth it to those companies to pay slightly better to get employees who knows their stuff or are willing to learn. No one is afraid to lose a job where they make minimum wage since they could bounce over to McDonald's or the BK lounge and make the same, but start paying them more and watch the majority actually try to keep their jobs.

RE: Thank goodness for...
By FITCamaro on 11/10/2008 10:32:09 AM , Rating: 2
Actually it's places like Newegg that have put CC in the situation they're in.

I try to support local businesses whenever I can. For computers though I go to newegg. For TVs, DVDs, etc, I go to a B&M store. But yes typically I go to Best Buy. Their DVD selection is way better.

RE: Thank goodness for...
By MrBlastman on 11/10/2008 10:37:23 AM , Rating: 2
I know I am to partially blame - I have been buying computer parts for years from places such as Monarch Computer(RIP - they were good while they lasted... well, until they corrupted themselves) and NewEgg. However, Fry's and Microcenter suprisingly have improved dramatically in their high-end and hardcore enthusiast parts and I find myself actually spending a couple of extra bucks at the local stores rather than online.

Circuit City I would use to buy mundane things like Routers, an occasional software title and well, that is about it. I don't buy much. The other things like cables and wiring I would order online.

I think we are witnessing an evolution of businesses. Either they adapt and cater to the right market, or they fail.

RE: Thank goodness for...
By amanojaku on 11/10/2008 10:48:21 AM , Rating: 2
I used to go to CC because I loved the fact that I could get my money back without any questions if my purchase was defective in any way. I stopped going there for a few reasons that weren't entirely related to CC:

1) Prices - Online prices are generally cheaper
2) Taxes - I live in a state and city with higher taxes than most places
3) Shipping - Generally free online, and usually within a few days
4) Inventory - I get a better selection online

B&M usually can't compare, unless you REALLY need something NOW.

RE: Thank goodness for...
By Parhel on 11/10/2008 1:26:04 PM , Rating: 2
I used to go to CC because I loved the fact that I could get my money back without any questions if my purchase was defective in any way.

If your purchase is defective, any reputable retailer should allow you to return it.

I stopped shopping at Best Buy for that reason. I bought the original Baldur's Gate, and there was glue all over the first disc. I couldn't get it off, and the discs were unreadable, yet they would not allow me to exchange it for another copy of the same software.

Say what you will about Circuit City, but at least they wouldn't have done that.

RE: Thank goodness for...
By Reclaimer77 on 11/10/2008 6:24:23 PM , Rating: 1
I stopped shopping at Best Buy for that reason. I bought the original Baldur's Gate, and there was glue all over the first disc. I couldn't get it off, and the discs were unreadable, yet they would not allow me to exchange it for another copy of the same software.

You are flat out lying or simply not telling the whole story.

RE: Thank goodness for...
By Parhel on 11/11/2008 10:33:40 AM , Rating: 2
No, it's true. I argued up and down with customer service, and even got a manager involved. They said "you can't return opened software." I said I wasn't returning it, I was exchanging it. No go. I had to contact the manufacturer to get a replacement disc.

Interplay apologized to me, and told me that a lot of people had the same problem. The disc was physically glued to the cardboard sleeve because the discs were inserted before the glue had dried. In my case, only the first disc was affected, but they wanted to replace them all.

I know it wasn't the official Best Buy company policy, and I know that you can find idiots who aren't capable of understand their company's policies working just about anywhere. I've occasionally bought stuff from other Best Buy stores, but the one that ripped me off is the closest to my house, and I'm not going to shop there again.

RE: Thank goodness for...
By badmoodguy on 11/11/2008 2:13:12 PM , Rating: 2
You are flat out lying or simply not telling the whole story.

Bzzzt. This was a known problem with BG. They totally screwed up the packaging while trying to save a few bucks by not using normal cases for the multiple disks. My version was also hosed but I downloaded the disk instead of bothering with getting it fixed.

RE: Thank goodness for...
By TomZ on 11/10/2008 11:59:51 AM , Rating: 2
For TVs, DVDs, etc, I go to a B&M store.

Why? B&M's have ignorant salespeople, high prices, and limited selection. I can typically beat any B&M price by a large margin (e.g., $949 vs. $1499 for a TV I've been researching), and buying online is faster and more convenient. Just a few mouse clicks and my purchase shows up at my door.

RE: Thank goodness for...
By MrBlastman on 11/10/08, Rating: 0
RE: Thank goodness for...
By TomZ on 11/10/2008 12:16:28 PM , Rating: 2
The TV picture quality is a strong function of the picture settings - and in my experience, most stores don't have the picture settings optimized for their display models. So I don't trust that at all.

No, I'd prefer to go online and read expert reviews, compare features and specifications between makes and models, shop for prices, and make my decisions that way.

RE: Thank goodness for...
By MrBlastman on 11/10/2008 12:22:30 PM , Rating: 2
Back in the mid-90's, no matter how well you played with the picture settings on a Zenith tube TV, you could never get it to look as good as a Sony Trinitron tube. It just couldn't be done. You're right about picture settings being optimized, but you can only optimize so much.

If you had to, you could play around with the picture settings yourself in the store. Sometimes there is no replacing from an actual experience. You'll get a more accurate gauge with your own eyes than that of someone else - considering that we all see things slightly differently from each other.

Of course, I'm a snob when it comes to buying monitors and TV's. I don't trust what someone else says on the internet about it - I need to see it in person.

This is why I think stores still serve a purpose - there are many consumers that like to see and touch things first. Then there are others who just don't care. A TV is a TV and a computer is a computer, regardless of the specs. For them, there is online.

RE: Thank goodness for...
By Suntan on 11/10/2008 12:55:25 PM , Rating: 5
Hah, that's funny stuff. To say in one sentence that you are a "snob" about TVs, then argue that seeing them setup in a place like CC as your reference evaluation is rather commical.

If I want to evaluate a set on my own, I'll do it hooked up to my equipment, in my room lighting after it has been properly calibrated. not while it is sitting out on a rack of shelving while being fed a bad signal that is being split with 64 other TV sets. If I want to eval a proper Tv in a proper setting before bringing it home, I'll go to a specialty HT store that cares enough to have their demo sets ISF calibrated by certified technicians (and actually employ ISF certified technicians.) How many of those do you see at CC?

Lastly, right now I am researching in an effort to decide if I want to buy a new computer monitor. I'm looking at an Ezio CG241W. Please let me know which CC or BB in my local area that has one on display so I can look at it before buying because right now my only option is to buy it from a reputable online store that has a liberal return policy and evaluate if it meets my needs in real world usage.

The idea that people only buy online if they don't care is a crock. However, its the only weak argument you have left to make to defend CC so I can see why you are clinging to it.


RE: Thank goodness for...
By MrBlastman on 11/10/2008 3:16:46 PM , Rating: 2
What part of what I said, in the context of the thread stream, indicated I was referring directly to Circuit City? TomZ referenced B&M stores, with which I directly retorted.

You are grasping at straws here. :)

Look, if I want to review a lineup of TV's, weather I go to Hi Fi Buys, Best Buy, Fry's, Circuit City or any other B&M store (even the high end ones), if all of the TV's share the same awful signal, or good signal, they will equally have an equal opportunity to display their quality to me. If it is a bad signal, they will all use that same bad signal, allowing me to judge them among their peers. I'm not looking to evaluate a TV on its own at this point, I am simply looking to weed a few out from the rest and at that point I can begin a more targeted approach to what suits my tastes or not.

Are you implying it is entirely plausible to sit at home on your couch and order three or four different TV's via the internet, have each delivered one after another and try them one after another?

I would dare say that is inefficient both on your time and of our postal system for delivery costs and time spent. It is sometimes far easier to walk up to a display to get a general idea and then narrow things down.

RE: Thank goodness for...
By Suntan on 11/10/2008 3:56:26 PM , Rating: 3
That would be the original post of yours where you were lamenting the loss of CC.

Get off it. The reality is that you *can* get a very good sense of what to buy with online research. Then you can order it and verify that it meets your needs. You can return it if it doesn’t. The idea that people buy online because they don't really care what they get is a crap argument.

I’m still waiting to hear which CC has my monitor so I can see it in real life prior to buying it…


RE: Thank goodness for...
By MrBlastman on 11/10/2008 7:51:15 PM , Rating: 1
You either are thick headed or you have a sunburn inside your head... I can't seem to figure out which it is. :)

It is far easier to size up a product in person than through a website.

RE: Thank goodness for...
By orphen193 on 11/11/2008 11:06:58 PM , Rating: 2
one thing i would say about what you said is that there are no ISF techs at any CC they use a dvd to cali your tv where on the other hand BBY has them each store has 2,the one near my house has 3 tvs that are ISF cali so you can see what it looks like with it on and off

RE: Thank goodness for...
By Suntan on 11/10/2008 12:28:49 PM , Rating: 2
Agreed. Looking at them side by side on a wall at a B&M store is an exercise in false hope. When's the last time you got a favorable reaction from a CC or BB store employee when you asked them to hook up a DVD player so you could run your DVE disc to setup the TV properly?

Further, the last big TV I bought wasn't even available at local B&M stores. I could have bought one that was available at the local store, but I would have paid more and not gotten the features that were important to me.

Come to think of it, all of my major electronics devices have been bought site unseen (and based on online research) for quite a few years now. It works for me.


RE: Thank goodness for...
By FITCamaro on 11/10/2008 12:57:33 PM , Rating: 2
Games online are only a few dollars cheaper once you add shipping than just getting it at the store. DVDs I get on sale. And again I can have it that day.

For TVs, I do research online. Then buy it where I see it cheapest. I don't want to have to ship back a defective TV.

It's also just nice to get out. I don't want to just sit at home every second I'm not at work.

RE: Thank goodness for...
By Suntan on 11/10/2008 2:02:54 PM , Rating: 3
It's also just nice to get out. I don't want to just sit at home every second I'm not at work.

So the only options are work and BB/CC?


RE: Thank goodness for...
By Omega215D on 11/10/2008 1:30:03 PM , Rating: 2
I am lucky to have a good Microcenter within driving distance and for stuff other than computers I have a store known as B&H Photo and Video

They have much lower prices on cameras, MP3 players etc and carry more of a selection than Best Buy or Circuit City which only carry the usual iPod and such. I also have a J&R near me as well but their return policies aren't that great (refunds are a pain to get).

RE: Thank goodness for...
By Suntan on 11/10/2008 12:18:49 PM , Rating: 1
I do not morn at all.

The only thing that makes a BB store feel like a good shopping experience is a trip to a CC store.

There is nothing positive about stepping into a CC store (in my area) unless you actually have time to spare and enjoy being accosted by cell phone provider employees forcibly hawking yet another refreshed RAZR at you.

It is telling that a store, with no human interaction at all (Newegg) can leave you feeling like you are a more valued customer than CC ever did (and BB is right down there with them.)

Good riddance.


RE: Thank goodness for...
By TomZ on 11/10/2008 12:22:17 PM , Rating: 2
It is telling that a store, with no human interaction at all (Newegg) can leave you feeling like you are a more valued customer than CC ever did (and BB is right down there with them.)

Exactly. And until electronics retailers figure this out, they will continue to have the kinds of hardships that CC, BB, CompUSA, and others before them have experienced. Good riddance mediocre retailers!

RE: Thank goodness for...
By Ammohunt on 11/10/2008 2:39:49 PM , Rating: 2
Its obvious you and Circuit City have no idea on how the free market works. Businesses are not in business just to provide competetion to other businesses. Circuit City like Media Play failed to market correectly and failed to inovate.

RE: Thank goodness for...
By MrBlastman on 11/10/2008 3:10:09 PM , Rating: 2
Just like you failed spelling class? Nice try, friend. :)

RE: Thank goodness for...
By themadmilkman on 11/10/2008 3:20:49 PM , Rating: 2
At what point does he lambast the free market? The only failing here is your reading comprehension.

RE: Thank goodness for...
By Ammohunt on 11/10/2008 4:07:23 PM , Rating: 2
Luks lyke i rezpondad two the rong powst, my bad. I wish i were as gud a spellar as U!

RE: Thank goodness for...
By fibreoptik on 11/11/2008 9:07:47 AM , Rating: 2
Circuit City is and always was a pile of crap. It will NOT be missed.

Unsurprising for a business completely out of touch
By JasonMick on 11/10/2008 10:24:03 AM , Rating: 2
Let me preface this with a disclaimer. First, there are no Fry's in my area, so I sadly cannot enjoy what some here say is so great. Secondly, I did shop @ both Best Buy and Circuit City, and found their prices to alternate of which had the better sale deals. So I'm not completely down on Circuit City.

That said, I cannot believe the illogical nature this company conducts itself in.

Perfect example:
A new store opened in a part of Michigan I'm familiar with just 2-3 months ago. This huge store took months to build and was specially built for Circuit City. When I looked at the list of store closings I was shocked to see this store on the list.

Perhaps they are closing all the stores in MI because of the poor economic climate, but to select brand new stores for the 20 percent to close? This seems sheer lunacy.

In my mind the loss of Circuit City is sad for its effect on competition, but any company that opens a huge new store and then closes it months later, while leaving older, less successful stores open is doomed to failure.

By Lord 666 on 11/10/2008 10:50:49 AM , Rating: 2
Putting that new store in MI on the chopping block just makes it easier for them to sell to Best Buy. The newer store is more attractive for sale for many reasons for buyers, but for sellers, they are attempting to cut their losses to a minimum.

I'm looking forward to the sales as I have noticed Best Buy have dramatically reduced their prices on HDTVs (LN46A630 specifically) for this week.

By Aarnando on 11/10/2008 11:16:38 AM , Rating: 2
"Out of touch" seems an appropriate tag to me. Even if selling the new store makes sense, the question of why this store was built in the first place comes up. If you're bleeding money to creditors, it is not a good idea to increase your debt by creating new locations.

By theapparition on 11/10/2008 12:17:50 PM , Rating: 2
Still opening up one right around the corner from me. As if the 4 other stores in a 10 mile radius wasn't enough.

By Exterous on 11/10/2008 11:00:43 AM , Rating: 3
A big reason Circuit City is facing a crisis was their 'Drive to 65' program. Their goal was to open 65 new stores over the past 2 years with low regard to market conditions. Not to mention the bungeling of a new register system that failed, leaving about 15-20% of stores that can't communicate with the rest. Want to check stock there? Too bad.

The part about leaving 'less successful stores open' is not true. Older maybe. The closings were based on performance in relation to expenses. The new stores might bring in a few more dollars, but the property is probably mroe expensive and so is the upkeep.

As an employee of Circuit City in Michigan I can tell you that the stores that closed were really of no suprise to us (well, one of the 6 was - we didn't expect them to close that many in one of the best districts in the company). They were contantly under-performing and rarely met their daily goals.

The new stores never got a chance to get off the ground. They looked nice, but didn't ahve the customer base that a lot fo the older ones did. Would they have done better? Probably if the they had gotten a chance to grow. Unfortunately, this is not about the long term right now

*crosses fingers that I get to keep my job till I find another one*

By Exterous on 11/10/2008 11:02:09 AM , Rating: 2
Edit: I ment one of the six that closed in our district - the east side of michigan

By FITCamaro on 11/10/2008 2:43:16 PM , Rating: 2
Not to mention the bungeling of a new register system that failed, leaving about 15-20% of stores that can't communicate with the rest. Want to check stock there? Too bad.

Interesting. I always thought Circuit City had a better inventory management system. I know with Best Buy, their in-stock product numbers aren't always up to date. I was told with Circuit City they could track in real time whether or not a product was available.

RE: Unsurprising for a business completely out of touch
By aj28 on 11/11/2008 11:57:05 AM , Rating: 1
They can, yes, however the problem lies in their POS systems. Traditionally Circuit City had used either DPS and Magellan in their stores, but most new stores (as well as some old ones) recently moved over to a system called rPOS which, while allowing for a more streamlined GUI and internet access at every terminal, could not be remotely logged into by either of the other two systems.

Coincidently, if you purchased an item from an rPOS store, it's an absolute bitch to return at stores using another system because the only way is by returning it as "no history" which is basically a direct hit to that store's bottom line. Most of them will do it anyway so long as you have a receipt, it's just a pain is all...

By Oregonian2 on 11/11/2008 11:08:22 PM , Rating: 2
A newspaper article I read about it today said that a big problem was that when CC was king, they went and made major blunders in the 1990's by expanding by getting great deals on land in bad locations. Locations that didn't bring in the crowds.

By HaB1971 on 11/10/2008 2:49:53 PM , Rating: 2
Here in Georgia where they are cutting a lot of stores, there is a new store that had it's grand opening in July that is one of the closing stores. This one had the casual approach with associates in jeans, it was hard to tell them apart from the 5 customers normally found in the stores.

Being curious on the sale prices (like the rest of the scavengers) I paid the store a visit and found the prices for a close out were a joke. 5% on PC's and laptops, with up to 20% off of stuff like DVD's etc.

This is my perception of the situation.. you need to close 155 stores to stop the hemorrhaging of money to have some liquidity. Each moment these stores are open you are loosing money on rent, utilities, employee pay and benefits.
Instead of just loading up all the product in a truck and delivering it to the open stores they have this liquidation team sell off the product at prices that really won't drive any foot traffic. Not to mention they took those stores off the CC website so you could not even check inventory.

If they want to stop the rot then either redistribute the stock to other stores so they can sell it or gut the prices so they can shut the stores ASAP therefore saving some money.

Don't expect to find PS3's or Xbox 360's on sale they'll get their butts handed to them by Sony and Microsoft for trying.

Yes it sucks to lose your job because of inept management and the inability to adapt. The company laid off about 3,400 retail employees last year and replaced them with lower-paid workers, a move analysts said could backfire, hurting morale and driving away customers. hmmm... ya think??

By FITCamaro on 11/11/2008 7:32:21 AM , Rating: 2
They pissed off a lot of people when they moved from commission to hourly as well. I worked in a Circuit City for Sprint when the transition happened. I understand why they did it. There was no incentive to move up in the store because commission based employees could make more than the managers. There were guys clearing $60,000 a year working there while managers might get $35-40,000. Some places more, a lot more(was told a guy in Tampa was clearing $100,000 a year).

So it sucks that they did it, but they kind of had to. But I'm sure it alienated a lot of people.

By HaB1971 on 11/11/2008 1:57:18 PM , Rating: 2
I also happened to work there at the time of the transition from comissioned to hourly and though you can argue that people were making too much money on comission they only did so because they knew how and what to sell to people and only kept that money if the product was never returned.

Got to feel sorry for those losing their jobs though.

By aj28 on 11/11/2008 12:07:40 PM , Rating: 2
To be fair, I'm pretty sure the remaining product in those stores was already sold off to liquidators - It's no longer Circuit City setting the prices at those locations. Also, much of the product is being moved to other stores or returned to their manufacturers (one of the perks of buying on credit) as a means of recouping their losses.

Also keep in mind that this is in fact a legitimate reorganization effort. They're not just slashing prices and pleading for people to come back to them... Lots of people on district and regional levels are losing their jobs because the positions have been deemed unnecessary. For the most part unless you are an overarching district manager or store-level, you risk being gutted. Specialty people like district firedog and operations managers have already been removed from the loop... They're going back to a streamlined, sales-driven business like they always should have been and for the good of the industry, let's hope it works out.

(Also, as a side note to the online-only people, keep two things in mind 1) Online stores will almost NEVER pay for return shipping, and 2) Laptops and desktops are often sold very near, at, or below cost at retail outlets, so don't fool yourself into thinking NewEgg will always have a lower price, regardless of their significantly reduced overhead.)

By Eris23007 on 11/10/2008 8:12:39 PM , Rating: 5

The notion you're addressing here is one of "sunk costs." Sunk costs are dollars which have already been spent by a business and cannot be recovered, such as those spent to build a new store.

One fundamental concept taught early in an undergraduate-level (and MBA-level, for that matter) business curriculum is to ignore sunk costs when making business decisions. While this seems counterintuitive, it is absolutely the correct advice: who cares how much you spent on something in the past - business decisions MUST be based purely upon expected future performance.

As someone else pointed out, newer stores are not necessarily more successful. Older stores may be more successful due to a superior location, better management & staff, or simply a long-standing clientele. The incorrect decision may have been the locations and/or economic climate in which CC chose to build their new stores.

So, if you have an old store which is making a strong profit margin compared against a brand new store which cost you millions of dollars to build but is losing money, and you have to reduce operating expenses due to insufficient cash flow (the situation in which CC finds itself), which are you going to close? No question, the new store.

I cannot comment on this specific decision that Circuit City made, as I do not know the details of this store vs. the others not selected for closure. That's not the point. The issue is that you used flawed logic in concluding that Circuit City acted illogically. Ignoring sunk costs is absolutely appropriate.

Not only that, you termed their decision "sheer lunacy."

I don't know about others, but I've observed this over-reactionary pattern in a number of your posts, especially as pertains to others' business decisions. Have you considered that maybe you are unqualified to cast these judgments? The people making these decisions are certainly not perfect, but likely have extensive training and years of experience operating large businesses.

You might benefit from considering others' perspectives before leaping to such emotional (and logically flawed) conclusions. You might also benefit from taking a few business classes to understand the theory underlying the decision-making processes you so regularly trash.

Extended Warranty?
By blubbster on 11/10/2008 12:56:23 PM , Rating: 2
I bought two expensive extended warranties for big ticket items this year. Is there any chance I can return them. One is younger than 3 mo. one isn't.

RE: Extended Warranty?
By AntiV6 on 11/10/2008 2:48:50 PM , Rating: 2
Yes you can get a refund with CCA. They are pro-rated last I checked and a full refund within 30 days of the purchase.

Ex-CC sales associate here. One of the "retards" I guess, haha.

RE: Extended Warranty?
By blubbster on 11/10/2008 6:12:53 PM , Rating: 2
Thanks for the response. That's what I was looking for. Too bad they are going out of biz, my store (San Jose) was doing o.k. from the looks of it.

RE: Extended Warranty?
By aj28 on 11/11/2008 12:10:08 PM , Rating: 2
Actually, CCA is backed by GE Assurant, so your warranties will still be honored, including in-home service on desktops and TVs. The same can't be said for Best Buy, who plan on managing their own warranties starting early next year...

Checkout Issues
By rpierce on 11/10/2008 1:31:10 PM , Rating: 4
I thought CC was pretty good. I shopped at both BB and CC. Unfortunately, I started having problems getting checked out at CC. Several times I would go to the register and no one was in sight. If I stood there long enough someone would finally come over.

I had to stop going to CC because I got frustrated with not being able to make a purchase. I don't know much about business, but if I had to choose one thing I wanted to do right, I imagine ringing up my customers would be high on the list.

That did not seem to be the case for CC. At least not for the one near me.

RE: Checkout Issues
By xeroshadow on 11/10/2008 7:32:45 PM , Rating: 2
I mainly bought DVDs on their release day from CC. I really didn't care for the layout of the store and the way they did checkouts always bothered me. You were never sure where you were supposed to check out. Only recently it appears they added two dedicated checkout stands......but there is usually no one there and you still either find a sales person or go to the area where they do sales/returns. My CC was not on the closure list so I will not be affected...I hope. BB is too far away.

RE: Checkout Issues
By Nfarce on 11/10/2008 8:19:35 PM , Rating: 2
I have to second that. Most of my repeat purchases at CC were when they had DVDs on sale, like 2/$10, $5.99ea, ect. In fact, at a Halloween sale two years ago at CC, I bought 10 horror flicks on DVD for $3.99 each - a feat hard pressed to find online. But just about every CC here in metro Atlanta ( all are closing sadly) had a different layout, especially at checkout.

B&M stores still have great deals that you can beat online shopping like NewEgg and Amazon if you really do your homework. My most recent software purchase was at BB about two months ago which had Kaspersky Anti-Virus 2009 on sale for $19.99 - well below Amazon and NewEgg. Nevertheless, I still prefer to buy big ticket items like PC monitors and big screen TVs from stores, not online (especially with PC monitors and NewEgg's lame dead pixel return policy) - unless the difference is by many hundreds, which I have yet to come across in comparison shopping - for what I've been shopping for anyway.

Oh no
By audiomaniaca on 11/10/08, Rating: 0
RE: Oh no
By Regs on 11/10/2008 12:17:10 PM , Rating: 2
This is going to be a sad Christmas.

RE: Oh no
By MrBungle123 on 11/10/2008 6:00:04 PM , Rating: 2

Just in time for Christmas
By Spivonious on 11/10/2008 10:19:21 AM , Rating: 2
My thoughts go out to the employees losing their jobs, but the liquidation sales could not have come at a better time of year. My wife and I are both looking to get MP3 players and I'm sure the rest of the family won't mind electronics.

RE: Just in time for Christmas
By Suntan on 11/10/2008 12:21:00 PM , Rating: 2
I might feel a little this way, if I had ever had a pleasant experience with a CC employee.

The only company that springs to mind with equally poor service would be Northwest Airlines.


Freaking managent... seriously.
By gochichi on 11/10/2008 8:07:16 PM , Rating: 2
Maybe I simply like the underdog, but I strongly prefered shopping at Circuit City. My local Circuit City had a great space but dim lighting (some of the lights were out and they wouldn't get replaced, it was odd)... which signals to me incompetent management.

Thus, at the Macro level yeah... yada yada yada "global economic crisis" blah blah blah. But truly, I think they went lax on manager training and worker morale. Put some new light bulbs in, tidy up the whole store and SELL ... that means act motivated, smile, etc. etc. Not to be judgemental of the people, but the culture at Circuit City had collapsed long ago and it was that mistake that caused this, not the economy, not Walmart's "evil empire".

When stubbornly and loyally shopping at Circuit City I felt like slapping some managers. Now I kind of wish I had (not literally)... but c'mon yall, get that fire going.

If Best Buy is doing fine, and Best Buy is SO far from perfect... it signals to me that the conditions in the market are just fine. Seriously top management at Circuit City, you guys blew it cause you blow.

At least there will be some good buys. Bad lighting, and dead beat management and all... I'll still miss Circuit City. Something about the hair-gel over at BB just rubs me the wrong way. I think it's partly that newbs love shopping there. I'll buy stuff there, but I'm in and out as fast as I can.

RE: Freaking managent... seriously.
By Davelo on 11/10/2008 10:18:06 PM , Rating: 2
It's the only explanation. Bad decisions by upper management. If it was market conditions then Best Buy would also be suffering, but they're not. I hate going to BB because they have so many customers it takes too long to get through the checkout and forget returning anything. I once waited almost two hours in a return line at BB after Christmas. Frys is the same.

So CC managers, it's all your fault. You suck.

the reason
By g35fan on 11/11/2008 2:23:57 AM , Rating: 2
the reason this happened is pretty cut n' dry in my opinion. CC used to have great customer service. I'd walk in and the youngest person on the floor was 25yrs old. To me, that means for the most part that these CSR have *some* idea of what they're doing and i'd value their input. It also meant that they were getting paid more.

Best Buy on the other hand figured...or decided...on something very important before CC. They decided the American consumer is beyond stupid. Boy are they right. Younger and better looking employees, hip environment, agressive youth advertising.

God I hate worstbuy. This means that they'll never go under. *sigh* thank you for allowing me to never have to buy anything from BB ever again...

RE: the reason
By orphen193 on 11/12/2008 12:24:45 AM , Rating: 2
hmm dont know where you live but CC in my town is filled with 16+ i tihnk the oldest is like 23 not sure and as for the BB nothing but some young ppl there but mostly 20+ there, and just because they look young doesnt mean they dont know crap i mean, I'm 23 and I know damn well i know more then any of the 25+ guys at my job and i get paid more lol sad but true

Great service from "Fire Fox" at Circuit City
By groweg on 11/12/2008 4:29:29 PM , Rating: 2
I recently bought a new computer and had a question about how to load an older but necessary 16 bit program I use onto a new 64 bit machine. Best Buy was unable to make this work but Circuit City knew what to do and I purchased from them. Circuit City's "Fire Fox" service group came through again recently when they successfully removed a nasty virus I picked up on the Internet. If this news means all their stores are closing I will really miss them.

By exanimas on 11/14/2008 6:00:53 PM , Rating: 2
It's Firedog, FYI.

And it still makes no sense.

Good riddance
By archermoo on 11/10/2008 11:22:39 AM , Rating: 3
I stopped shopping at Circuit City when they backed the pay to view DIVX format. When it died it hit them hard, but they seemed to have mostly recovered. They get no sympathy from me.

Beware of CC closeout pricing.
By superflex on 11/10/2008 12:45:55 PM , Rating: 3
Don't be suprised when you find the closeout prices suck. After CC announced the 155 store closing last week, several stories popped up the the net telling how CC raised the MSRP on the closeout items so they were in line with non-closeout store prices. Also, there will no returns allowed on closeout items.
Buyer Beware.

IMO, CC dug it's own hole. Lousy customer service, retards working as sales associates and pricing well above e-tailers.

Couldn't be happier they are gone. Now if BB would go away.

Filing so soon.
By bmheiar on 11/10/2008 11:02:11 AM , Rating: 2
Filing so soon. Say it ain't so. It has only been a week since they notified the public that they were closing 155 stores. I have one down the street from me, that was just built earlier this year and it is closing. I walked in last week, for the first time to see what I could get a good deal on. It was just all a big joke. There were far more associates (a lot of plain clothed security aka Loss-prevention) than were customers in the store. I bet their payroll outpaced their sales.

Maybe if they wanted to drum up more sales, they should have done deeper discounts instead of 10% on higher dollar items (HDTVs, Blu-ray players, computers/laptops, game consoles, & most games) and only 20% on lower dollar items (DVDs, Blu-ray discs & etc). I was looking to see if I could get a good deal on a HDTV and Blu-ray player with some movies, but not at their prices they were still asking for even with those so called going out of business everything must go discounts. With the economy as it is, people do not have the money to be spending on items in stores even with discounts, if those items are still priced more expensive than online.

I worked retail for 12 years with the world's largest retail company, before I found something better that applied to my degree several years ago. After all those years working in retail, I know that sometimes you have to take a loss, to discount below your markup, to get the sale. They are still not willing to do that. And now they are filing for Chapter 11, I wonder why?

Retail Stores
By 325hhee on 11/10/2008 2:02:13 PM , Rating: 2
I don't get it, people complain about the service from both BB and CC, but the bottom line is, they're both retail stores. You don't need to have a college degree to get a job there, and most of the sales people that work there are either kids in high school, or someone who is just working there just to get a pay check. Worse stores are the ones that work on commission like J&R here in NYC, I used to work for them, and we gave all the BS possible to get the sale with the best commission. I even said back in the P3 days Intel was far better than AMD, because I got a $20 bonus per Intel sale.

Both CC and BB have the same prices on non sale items, they're "Retail" stores. And they can not compete with online E-Tailers like Amazon, newegg, etc. No overhead, is a huge savings to these kinds of companies, you don't have to pay outrageous rent for a B&M, don't need a staff on the sales floor, etc.

I only use BB & CC when a new DVD comes out, they're usually $5-$10 off the retail prices, games haven't had sales on release dates in a while. I may buy a TV from one of them, but only if it's onsale and I have a coupon and other perks to go along with it. Big items I'd buy locally, only because it's a hassle to deal with a 32" TV that goes bad, have dead pixels, etc via internet purchases.

Retail is there for the impulse buy, or the need to have now buy, and with the economy in the toilet now, and jobs being lost left and right, no one is spending money. Or they're spending a lot less. Why does BB do better than CC is beyond me, to me they're the same store. Apple, Bose, Sony, and a few other company dictate their prices, and they'll be same everywhere you go, sometimes even on the net you can't get a better deal. I do my shopping either eon the net, or the weekly circular that comes out, that's it.

Who ever has the best deal gets my business, I don't interact with the staff, I just want the item I see on sale, go in and wait 20 yrs on line, because either the cashier is an idiot, or someone buying something has a million questions when they get to the register.

That's the main reason I hate B&M.

I call that...
By Kyanzes on 11/10/2008 2:12:24 PM , Rating: 2
... a short circuit.

By Comdrpopnfresh on 11/10/2008 11:22:43 PM , Rating: 2
How has radioshack managed to stay in business?

Compusa did not have competitive or even market-normalized prices on their products- and their customer service was horrible. They only staying in business b/c of their crazy midnight madness sales and all the free after rebate offers they did- most of which never resulted in people getting the rebate.

Didn't circuitcity start out as the same type of store radioshack started as- roots reflected in the names...

I definitely feel bestbuy has been successful because of their purchasing power. That, and all the appliances they sell- now that places like sears don't refresh their products often. Or it could be the wool, aka internal webpage, they've been duping customers with- is that still going on?

But if you asked me 5 years ago what electronics store was going to go under, I would have said radioshack- their products are outdated and their prices suck- something like $20 for a 15-disc spindle of cd-rw discs. They do still sell basic circuit/electronic components, but their selection and prices are far outpaced by online vendors. I guess they've been hanging on by becoming a 3rd party verizon store?

By dhalbert on 11/11/2008 11:11:55 AM , Rating: 2
In the past several years, I have often shopped BB and CC for various things: camcorder, digital camera, clock radio, car speakers, for instance. More often than not, either CC had something closer to what I wanted, or the CC price was lower, often because of a sale (especially if bought on line for pickup). The merchandise assortment was more interesting for non-computer stuff (e.g. the clock radio and car speakers) at CC. I don't have an axe to grind either way, but that's how it came out, which I think is kind of interesting. So I am a bit sorry to see CC go.

Credit Spigot is Turned Off...
By teckytech9 on 11/11/2008 2:05:00 PM , Rating: 2
The last time I went to Circuit City, I had trouble paying for my merchandise. I must have waited 5 minutes till someone finally showed up at the counter. Is this is an isolated incident or is this the shape of things to come? I mean, the management should take a trip to Asia, where a customer is treated like royalty.

I feel for the investors who owned stock in this mismanaged company. The shareholders can only blame the current management for the companies demise. The management who let all their experienced people go, to save revenue, has left customer service in ruins.

Also, the locations of some of their new stores does not make any strategic sense. If they selected the locations due to cheaper leases, then I can see where they need to close them now. Assuming they can sell some of their closed stores to generated capital remains a challenge. The consumer needs to be treated with a little respect, during these tough economic conditions.

By Codeman03xx on 11/11/2008 5:08:58 PM , Rating: 2
The main reason CC collapsed was for bad customer satisfaction. Why do they have bad customer satisfaction, BECAUSE THEY DON'T PAY THERE EMPLOYEES ENOUGH. You give your employees some cash and they help out the customer more. They got to many High school "no it alls" (which NO JACK SQUAT). They try to sell you a SONY anything because its expensive and shinny. Sony VAIO, PS3, BRAVIA, CAMERAS, Etc. The fact is that Sony its EXTREMELY over priced. I know i will get nasty emails saying but blu-ray is soo much better, this is WHY Circuit City failed, because dumb people listen to dumb people. For example you goto Circuit City on look wow blu-ray its shinny fast and has more space so its immediately better than everything, but the truth is that HDDVD HAD THE EXACT quality of Blu-ray its just you couldn't fit an entire TV season on one HDDVD. I Had the whole argument with a Circuit City employee and he still thinks that Blu-ray has better quality. ether way in 5-10 years hopefully we wont even need media, it will all be downloaded from your cable box into a massive hard drive.

Circuit City you deserve this after the way you treated millions of your customers and employees.

By Chipper Smoltz DT on 11/13/2008 1:33:52 AM , Rating: 2
Too bad am not there to participate in the liquidation sales. I really could buy some electronic stuff... Hmmm, the "vultures" - like me, perhaps - are just waiting for the right time to pounce and take advantage of the huge discounted prices for all of their items.

Maybe Best Buy could come in and "buy" some of their stuff... it's weird but the article says that Best Buy would feel the pinch if Circuit City would have a liquidation sale sometime soon... well, Best buy could also have their own discounted sales but the question is - how low are they gonna go to compete?

I guess it would be ok for them since they are not the ones filing for bankruptcy. Maybe they could purchase some of the stuff from Circuit City that they don't have in their inventory then resell them - that is assuming that both stores don't have identical stuff that they are selling.

Anyways, don't worry guys - Christmas is near and there's bound to be some people who are definitely going to buy some stuff.

"There is a single light of science, and to brighten it anywhere is to brighten it everywhere." -- Isaac Asimov

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