Circuit City may close stores

[Amerigo Vespucci]

Source: Pittsburgh Business Times

Circuit City Stores Inc. could cut 150 stores and thousands of jobs in lieu of filing for bankruptcy, The Wall Street Journal reported Monday.

The report, which cites “people familiar with the company,” says the struggling electronics retailer has hired bankruptcy lawyers but doesn’t want to file for Chapter 11 before the holidays.

Such a filing could hurt the company even further, the Journal says, because many shoppers would be worried that Circuit City wouldn’t be able to honor warranties on big-ticket items such as high-definition TVs and computers.

Richmond, Va.-based Circuit City (NYSE: CC) has seen its stock plummet in the last year, with the company unable to keep up with competitors such as Best Buy and Wal-Mart. Shares have lost 95 percent of their value in the past 12 months, closing Oct. 17 at 39 cents.

Read more: http://www.bizjournals.com/pittsburgh/stories/2008/10/20/daily4.html

[uppityperson]

1. Maybe they shouldn't have fired all their employees last yr, made them reapply for rehire at a salar

salary cut? Maybe?

[WriteDown]

6. It was a bad move....

but doubtful it made a difference. CC suffers from MANY problems not the least of which is extremely poor store layout.

[cascadiance]

40. Yup, they lost my patronage then! Also their DIVX disc format was insidious too!

The original DIVX tried to keep a more open DVD format from ever happening. Thanks to the marketplace for saying NO to that mess that Circuit City tried to foist on us.

[Skink]

2. OK nobody buys a Circuit city gift card.

[JeanGrey]

41. I love to get circuit city gift cards and have gotten them. They

just opened a brand new circuit city not far from my house - and they are always cheap on the new release DVD's, usually 13.99. Even cheaper than Walmart. I watch their sales and can usually pick up stuff like San Disk camera cards very inexpensively, and last year I got a fabulous deal on a 22 inch widescreen monitor (Samsung) that was 100 bucks cheaper than anyone else.

Circuit city is suffering because they have lousy customer service and a horrid return policy, and their prices overall are too high.

[ingac70]

3. My brother applied for a job with them years ago....

and as a condition of employment they gave him a piece of paper to sign, that had he signed it would have essentially done away with all of his rights under all employment laws in the state and US.

He decided against signing that bit of paper and sought employment elsewhere.

[WriteDown]

4. That seems extremely unlikely...

I have a friend who works for CC and loves it. Always hate to see any large employer go under.

[ingac70]

13. It's true. My Dad...

turned that crap over to his union and we never shopped there again.

[WriteDown]

15. What could it have possibly have said?

Most major chains live in abject fear of lawsuits which an item like that would have likely caused in spades.

[ingac70]

17. See the post...

CIRCUIT CITY STORES, INC. V. ADAMS below

[ingac70]

14. .....

http://www.lawmemo.com/articles/armendariz.htm

[ingac70]

16. CIRCUIT CITY STORES, INC. V. ADAMS

http://www.law.cornell.edu/supct/html/99-1379.ZO.html

[WriteDown]

22. Interesting...

Why did the 9th Circuit originally agree with CC? It did play out like I thought it would in a previous post. CC was sued and they lost.

[ingac70]

23. Don't know why the 9th agreed with it.

Thank goodness it happened then instead of now, because our current SCOTUS would gleefully side with CC.

[WriteDown]

24. Doubtful...

The dissent was written by Stevens and Souter. Bizarre.

[ingac70]

25. Stevens and Souter are pro-business....

just like they were all for that imminent domain case allowing land to be stolen for private business.

[WriteDown]

26. Don't remind me of that case....

That may have been the worst decision of my lifetime. I am not sure how anyone could look at that case and rule in favor of eminent domain. And here is the best part, they still haven't built anything after it was ruled in the developers favor. So all those people lost their homes for nothing.

[JeanGrey]

42. It IS the worst decision of our lifetime. Kelo vs. New London

effectively destroyed private property rights in America and as far as I am concerned, therefore, liberty.

[happyslug]

44. The court did side with Circuit City, the dissent object so the position

Justice Stevens wrote the DISSENT. Justice Justice Ginsburg and Justice Breyer join him in that Dissent. Justice Souter joined as to the last two parts of that dissent. Part 1, the part Souter decided NOT to agree with dealt with HOW the Federal Arbitration Act (FAA) was passed in 1925. Labor had opposed it, till the clause used by the Majority was added. The purpose of that clause was to make clear that the FAA did NOT apply to Employment Contracts. Once the clause was adopted, Labor withdrew its opposition to the FAA. Stevens point out the language used by the Majority to show the FAA does apply to employment contracts was clearly added to make clear the FAA did NOT apply to Employment Contracts. This is a result of Scalia's policy of ignoring Congressional Intent and relying on the "Clear" language of a Statute, as the sole method of interpreting that statute (And then ignoring the COurt's own pass rulings that "Interstate Commence" is anything Congress declares is interstate Commerce).

Here is the Dissent if you want to read it:
http://www.law.cornell.edu/supct/html/99-1379.ZD.html

The Actual Decision if you want to read it:
http://www.law.cornell.edu/supct/html/99-1379.ZO.html

[jobycom]

5. Instead, they should hire an advertising firm and some merchandising/designers.

No one shops there because their stores look like warehouses, and they have no real advertising campaign. Best Buy carries the same stuff at the same prices, but their stores are more exciting, and their brand name is plastered all over the television with somewhat catchy images and slogans. I can't even remember what Circuit City commercials look like, and the last time I was in a Circuit City, a few weeks ago, their layout was so bad I got bored trying to find it and went to Best Buy to get the same thing. Their selection was also weak, but I suspect that was because of their financial problems.

Last year CompUSA was getting hammered, and they tried several new tactics, and they eventually most of their stores and went online, with an intense email campaign. I've bought more from them online in the last year than I had for three years before that in their stores, and one of their stores was literally right around the corner for me.

Business model is everything. Circuit City has a terrible business model.

And in case you wonder why I'm in electronics stores so much, it's part of my job. I ain't that rich, although I do think wandering through Fry's and looking at the latest HDTV's is a good Friday night's entertainment. :)

[BootinUp]

10. Circuit City

was like the original electronics superstore or maybe second after Federated. From the mid 80's until mid nineties I shopped there quite a bit for sound equipment and televisions and other video stuff. I never thought they were a great place for computers though. Best Buy just beat their butts plain and simple.

Their commercials featured a giant plug, coming down from the sky I think and plugging in to the store, lol.

[jobycom]

27. Remember Computer City?

Way on back. Sold Packard Bells, which eventually went the way of the Packard.

I do remember the plug now. Dumb image, no engagement with the office. Best Buy runs commercials like the one with the teenage girl complaining that her parents won't let her get a piercing, and then they show up with Best Buy boxes, and she quits complaining. Hits the target audience perfectly, plays on parents' fears while still being positive--smart commercials. Giant plugs and vague voiceovers just don't engage. The interior of the stores is exactly the same--nothing to grab you. Best Buy has stuff everywhere. You feel like you're free to wander through and play with everything, like a giant toy store.

Oh well. Their problem, not mine. :) Not yet, anyway. :(

[BootinUp]

30. I think there was one of those

on Independence Blvd in Charlotte back when I lived there. And if thats what it was called then I shopped there a few times yes.

[ldf]

35. google

best buy complaints ....

[JerseygirlCT]

34. I noticed they'd redesigned their flyer for the Sunday papers this week

Looks like a red and white version of Best Buy's now. Same size and layout, just a different color scheme.

But I've found their prices NOT comparable. Best Buy (for all it's problems) is almost always better around here for prices.

And I've also noticed that Staples around here have lowered their prices - more in line with Best Buy now.

[Lorien]

7. They are a dark red, GOP owned company

so no loss there! It just opens up the market for more worthwhile blue retail stores.

[WriteDown]

9. Huh?

I'm sure that will comfort all those who lose their jobs. I find no glee in watching this.

[Lorien]

20. They mistreat their employees to begin with

their loss will leave an opening for a better, more just company to take their market and bring far more fair wages to their employees. I'm unemployed now, and it sucks-but America MUST insist on higher standards for workers or we ALL pay the price.

[WriteDown]

21. And who will this company be?

Best Buy? I've had the worst experience of my life trying to get them to honor their own warranty they sold me. Glad you are willing to make the sacrifice, but I am not willing to put other peoples families at risk.

[AAARRRGGGHHH]

36. So, for the workers at these 150 stores ...

Losing their jobs in a terrible economy 2 months before Christmas is a good thing?

K got it thx

[SOS]

29. Figures they are a GOP outfit

About two months ago we got an "urgent" letter fromm CC.
They said this was our "last chance" to buy a warranty on a TV we bought last Christmas.
$230 for a 3 year warranty.
Now they are going out of business? Nice.

Rip off your customers for a warranty that will be worthless in January.
One hell of a way to raise capital.

(we didn't buy the warranty)

[Gator_Matt]

8. Circuit City has been on a long slow decline for years

Many of their stores are dinosaurs from the 1980s with poor selection. Even the more modern stores are dark and unwelcoming compared to Best Buy. Perhaps the current economic downturn is simply the straw on the camel's back.

[4lbs]

11. The Circuit City store near me is pretty much crap.

As stated, the layout of the items is pretty much suck now. I used to really like them... in the 1990s. However, right about the time Bush took office, CC started going downhill fast.

Yes, the "new" employees at this store don't know jack about the products they are selling. I know more about most of that electronics equipment than they do.

I had one incident about 4 months ago in this CC that pretty much turned me off to buying there unless I absolutely had to do such. I was purchasing same "cake boxes" of blank DVD media. I was going for 6 cake boxes of 50 DVD-R each. The price was $9.99 per 50pack. At the checkout the lady said I could buy only 5 max. I asked her where this limit was written. I didn't see it on any signs in the store, nor in the flyer ads. She said, "well it's a policy. You can call corporate and ask them." I just left the six cake boxes there at the checkout and walked out of the store, headed to Best Buy.


I think they also screwed up in a major way by trying that whole DivX debacle in 1999 or 2000 that blew up in their face and made them eat a quite a bit of money.

[Kalifornia.Kid]

12. It's an alternative to filing bankruptcy which will probably follow Q1 2009

[madrchsod]

18. no one is giving them credit to purchase christmas stock

they were finished as soon as they did`t update their stores or move to better locations.

[bean fidhleir]

19. I bought a vcr there, felt like I was taken to the cleaners, and never ever

went back.

[slackmaster]

28. Good - They fucked me once, NEVER AGAIN!

:nuke:

[Danmel]

31. Their stores are too loud

I think they are designed to alienate anyone over 40. And believe me,. i am not a Lite FM kind of girl.

Just too much different noise coming from everywhere- loud tvs loud music, a went there a couple of times, but it gave me a headache.

That said, I hate to see people losing their jobs in this economy.

[LeftyMom]

32. Circuit City went to shit when they quit training their employees.

I used to work for them, and was responsible for product training in my store. They used to take this VERY seriously. New hires would get several phone book sized books with product info, there would be tests, weeks of training before you'd even talk to a customer.

Well, around 2000ish, they realized that they were getting underpriced by BestBuy, and that some people would rather spend a bit less even if it meant getting almost no useful assistance from the sales staff (BB has NOTORIOUSLY high turnover and does not bother to train sales staff on the features of their products) so they cut back on training. Well, the problem is, high ticket items and their accessories are the backbone of their business. If you're not getting any assistance on a very expensive purchase, you'll be less confident and more likely to wait or take your money elsewhere.

Since B&M stores no longer had service worth the hassle of driving to them, more people started shopping online, price pressure led to less emphasis on expensive employee training, and there was a vicious cycle. Finally they decided that experienced salespeople weren't worth the expense, let them go and hired teenagers who all seem to be about as smart as a potted ficus. At this point the BestBuyification of Circuit City was complete, but they're failing because they're not as good at it as Best Buy is.

In the long run I'd question Best Buy's prospects as well, if all you want is to make a purchase with no significant assistance, discount stores and Amazon can do the same thing cheaper.

[DainBramaged]

39. When CC dropped major appliances, they lost a HUGE market segment

In the 90's they decided appliances were too much of a hassle to bother with, in spite of the high volume sales. The dollar values weren't sufficiently high enough to justify the floorspace, and the 'damages' were too costly to absorb. So they ceded the Apliance business to Sears, Home Depot and Best Buy, who sucks at it anyway, and pretty soon, NO ONE over 30 was going to Circuit City.


I worked for one of the major electronics manufacturers in the 90's, and ate a LOT of shit whenever I went to Richmond to visit the buyers. They ALWAYS demanded deeper price cuts, more advertising (what a scam, advertising money ALWAYS went to the bottom line) than even Waly Mart wanted, and special models so as to foil the price shopping and "we'll beat any price" comparisons that were big back then.

In spite of my pain for the people losing their jobs, I hold no love lost for these ass clowns, they made their bed, they can sleep in it.

[LeftyMom]

46. Appliances have reliable margins too.

Not terribly high margins, but (unlike computers, which they also dropped briefly) they are a reliable money maker. The install, service and accessories are pure money too.

[JerseygirlCT]

33. Probably a good idea. Then they could clean up the ones they've

got and work on some knowledgable personnel and competitive pricing.

I couldn't believe how downright stupid the guy was when I was computer-hunting. And how bad their prices were - especially with a few other stores right in the same area. And how crummy the store looked!

I'm not surprised at this news.

[ChoralScholar]

37. From The Consumerist:

http://consumerist.com/5057400/dear-new-circuit-city-ceo-heres-how-to-fix-your-stores

How To Fix Circuit City
by
The Customers of Circuit City

* CC lost their best employees, which in turn meant they lost their best trainers for new employees. How would I fix it? Hire arsonists and collect the insurance money. You're going down in flames, you may as well get paid.

* Firing competent, experienced staff so they can hire incompetent inexperienced staff at a lower hourly rate is only one step above off-shoring (which is kind of difficult to do if you want your store staffed with live people on-site!). Scumbags, that's what Circuit City's upper management are: Scumbags. And honestly, I'm insulting scumbags by making the comparison.

* When spending at least $2,000 on a HDTV or Plasma TV, I don't think that I can trust the expertise of a 17 year old high school dropout to guide me into choosing which one might be best for me.

* Fix the damn CD and DVD sections. Seriously, can anyone find one thing they're looking for?... Highlight the gadgets! I hear people like little handheld things these days. Maybe make them easier to find, easier to fondle etc... Blow everyone away with friendly returns/customer service. Unlike Best Buy where they like to accuse you of committing a crime when returning something.

* Stop selling Monster Cable! They would sell exponentially more cables if they didn't want $103 for 6' of HDMI cable. If I see a retailer selling Monster Cable, I will usually look for an excuse not to buy something from them.

* The only *good* thing about Circuit City customer service is that it's SO bad, they usually just ignore you. And ironically, I count that as a plus, as there's no faster way to turning me off in a store than to be pestered by incompetent customer service. At least when I walk into a Circuit City, I know that the reps are all going to be huddled together in the part of the store farthest away from me, so I'll be left alone to browse at my leisure.

* Make the executives work for a month at random Circuit City stores, with no power or authority to make changes. Spend one week at each in the "Customer Service Booth", and require them to provide responses to each and every inquiry.

* What do I find wrong with Circuit City?
They have higher prices than their competitors, and most of the time they don't have what I want. How do you fix that?
Cheaper prices. Better selection. Aggressively letting people know that they have both.

* Reduce the size of the stores and aim for the higher end customers. Make sure everyone selling an item is an expert on that item, or at least on that category. Spend money on wages, benefits and training to attract and retain those people.In other words, become the opposite of what Circuit City is now, because you're not the best at that and you probably never will be.

* Integrate the Circuit City stores with the Circuit City website, with the goal of making shopping easier and less stressful.

* Does anyone get that good feeling that they get in BB when they walk into Circuit City? No. The stores look ancient, the cust. service is just piss poor, there are never any cash registers open at any store.

* Most of these kinds of stores put a bunch of cheap ass computers on display, then hire a moron to help customers. Real computer experts only go to CC or Best Buy because they are in a pinch- not because they want to. I could go to Target and get the same stuff they sell at CC, but it is cheaper.

* Stop selling the same thing as Best Buy. Switch to high-end computer parts and systems only. At least then you'd have something different... as it is, there is nothing different between Circuit City and Best Buy.

* I would love it if I could feel like when I go in and need to ask a question, it's not being answered by someone who just picks up the box and reads what I just read.

[Supersedeas]

43. thanks for the link

[Morning Dew]

38. They pretty much lost me with the stupid mail in rebates

long after others had stopped using them.

Then the employee purge - that was it for me - I don't even look at their flyers now.

[Stand and Fight]

45. Circuit City often has outrageous prices.

In the 1990s their prices were somewhat decent. Now I can find their merchandise online or at another store far cheaper.