How Circuit City Committed Suicide

From Prospect.org’s Beat the Press, summarizing this piece from the Washington Post:

The basic story is that last March, the wise men who run Circuit City came up with the brilliant idea of laying off their more senior salespeople, who get $14-$15 an hour, and replacing them with new hires who get around $9 an hour. It turns out that this move was not very good for business. One of the reasons that people go to a store like Circuit City, rather than buying things on the Internet, is that they want to be able to talk to a knowledgeable salesperson. Since Circuit City had laid off their knowledgeable salespeople, there was little reason to shop there. … The Post reports that Circuit City’s executive vice-presidents will get retention awards of $1 million each.

The good news is that this will now kill the company, preventing it from happening again; the bad news is that these executives will probably get new jobs at a new company instead of being rousted from their beds by out-of-work salespeople and perforated by pitchfork.

Santa Claus Comes for Failed Business Executives [Prospect.org via Daring Fireball]

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77 Responses to How Circuit City Committed Suicide

  1. Patrick McNamara says:

    This is the same reason Affirmative Action and downsizing was so popular during the early 90s. It gave them a chance to lay off many older (primarily white male) employees and get younger cheaper ones to replace them. What’s worse is that the younger ones were often working just as hard or harder at lower wages than those who were laid off but changes in the job titles fooled them into not realizing that. So a lot of women and minorities were cheated without realizing it.

  2. FAC33 says:

    Interestingly enough, here in Canada all of our Radio Shacks became “The Source by Circuit City” a year or two back…seems they had licensed the Radio Shack name in Canada and Radio Shack refused to renew it. They were supposedly going to open their own chain of stores.

    The Source stores are still essentially Radio Shacks in look and feel. And still no actual Radio Shacks. Not that it seems that it would make much difference. I had kind of hoped they would give our two major chains (Best Buy and Future Shop, which is owned by Best Buy) some competition but it doesn’t seem to be going that way.

  3. Tom says:

    This is not a problem with capitalism and working for the public sector–still less academia–will not protect you from this sort of thing. The abuse of power by arrogant incompetents, especially in academia, is even more extreme than anything you’ll find in the corporate sector. When I moved from academia to my first corporate job I was amazed by how humane it was in comparison.

    This sort of bad behaviour by executives is a problem with HUMAN BEINGS, and there is no utopian social organization that can completely engineer out the basic limitations of humans, including our lamentable tendency to see our own good as the only good.

    Social systems with reasonable checks and balances, particularly ones with more-or-less equal and antagonistic forces, can keep this tendency in check, but attempts to eliminate it entirely always result in some one force becoming totally dominant, and guess what: the entirely ordinary human beings who are part of that force behave… as if their own good was the only good.

    This is one reason why federal states work moderately well: governments at the state or provincial level tend to act as a moderator for excesses at the federal level (think of the state’s response to RealID in the U.S., and provincial responses to pretty much everything in Canada.)

    In a capitalist economy, the invisible hand of the market is known to be insufficient to discipline bad executives from looting company coffers and robbing shareholders and employees alike. A good book on some of the more recent problems with this sort of thing is Roger Lowenstein’s “Orgins of the Crash”, a history of the dot-com era. It makes clear that aggressive regulation by well-funded agencies is absolutely necessary to keep the excesses of the–again–perfectly ordinary human beings who are running public companies in check.

  4. lamarlowe says:

    In response to a couple of comments here, it was largely the older, more experienced and knowledgable people who were making more money, and thus got downsized, not part-timers by any means but career-minded professionals who had been there a number of years. To add insult to insult, the lower paying jobs they were offered sometime later were mostly temp positions anticipating some holiday rush, which obviously didn’t happen.

    I guess a lot of consumers are like myself, voting with their wallets by staying away in droves. There are some good comments at the end of the Beat the Press article as well.

  5. bpm140 says:

    Ten years ago everyone was talking about how Circuit City was screwed — out-competed by Best Buy.

    Three years ago everyone was talking about the meteoric rebirth of Circuit City — outcompeting Best Buy.

    Now Best Buy is rocking again and CC is in the doldrums. I think I’ve seen this movie before.

  6. icky2000 says:

    #8: The Oregon minimum wage will be increased to $7.95 on Jan 1 and is among the highest in the country. $9 is still well above the min wage in most states.

  7. loraksus says:

    #61 I do not want to pay for a so called “knowledgeable salesperson”. Just make sure there is some kid in a blue, red, or yellow polo shirt nearby to go get my stuff and ring me up.

    I don’t know if you’ve been tracking prices recently, because Circuit City prices haven’t really been competitive recently. Mediocre, really

    Unless you’re using a $40 off $200 coupon that you printed off the net (or got when you moved) to buy something on clearance, there really hasn’t been any compelling reasons to buy at a circuit city in the last 6 months.

    You’re not paying for a “knowledgeable salesperson” anymore, but you sure as hell aren’t getting any sort of a refund.

  8. AliasUndercover says:

    Is there really anything to say except that I can’t wait for those “Store Closing” bargains?

  9. AKhan6787 says:

    Comments 74 and 75 are very interesting, and both have valid points. I myself have been with the company for a little over 3 years, at 2 seperate stores. U can tell a company is desperate when they pull some new random save-all tactic out of their ass every couple of months aftter the last retarded acronym they tried to force down our throats didnt work. And dont get me started on the iplementation of buyers guides to the scheme (many associates were terminated for not using them, even though the associate’s knowledge greatly exceeded the information on the sheet of colorful paper that was in front of them.) Furthermore, I cant even count the number of management/supervisor structures ive seen on one hand. Or maybe two for that matter

    But enough ranting, more about the original topic. I don’t understand why they decided to have a mass layoff (again) before trying at least one useful strategy. Like focusing on a forgotten department.

    What about Car Audio (formerly called The Roadshop before they dropped the exclusive title)? But its not like products in that department have high gross margin or anything. I mean we only make about 50 to 70 percent profit on those items, so that would be pointless. Why not focus on computers, in mean we make a whopping 5 to 10 percent there. oh wait………..

    Maybe my view is biased because im a car audio guru. But Circuit City has been neglecting this department for years, letting it fall into the cracks. To prove my point, re-read post number 74. While breaking down the departments in CFA2, the author failed to even mention Mobile.

    Honestly after reading these comments and a number of other articles, I’m bout ready to call up my store and tell them to F@#$ off. I might as well because now there are rumors of over a hundred stores closing, and im sure the desolate location I work at is at the top of the list.

  10. Anonymous says:

    Its happening to a lot of people especially in high tech. HP is laying off older workers (because they make more than new hires and have worked long enough to get longer vacation time) and doing their best to shift work to third world companies. So much for loyalty and long service. Needless to say, morale is in the total. This is year 7 for my wage freeze. I have been screwed for my overtime and beeper duty money as well. I made more 10 years than I did today. HP lays of thousands of workers but their workload doesn’t go with them, it just gets dumped on the suckers that remain. Our boss, Mark Hurd, made over $45 million the first year he started work at HP. Randy Mott, a VP, got over $24 million from HP in his first year. It is a dirty and filthy form of capitalism that is being practiced here. HP employees need a union to protect them from such predatory practices. HP needs to be sued for screwing older workers and cheating them of their medical benefits.

  11. Anonymous says:

    Some posters have questioned how it is upper management gets huge bonuses while they drive their company into the ground.

    It’s simple. Executives at one company are often board members at others. They scratch one another’s backs and give each other bonuses. They’re supposed to be serving the shareholders, but are really serving themselves.

    How do they get away with it? Until recently, shareholders would sue if the board threw money at underperforming execs. Recent changes in the law (thanks Bill Clinton) and its interpretation in the courts (thanks George Bush) have made it far, far more difficult for shareholders to sue.

  12. Anonymous says:

    Remember Nobody Beats the Whiz? These stores come and go. The only difference is that this time around you’re dealing with a much more technologically sophisticated consumer base and your dealing with online sales as your major competitor. This all leads me to believe that for the first time, these stores will slowly “go” but never come back. This is all very bad news for the realtors who own these huge properties. But the truth is, the only people I know who are willing to spend 3 times the amount on a backup hard drive are my parents because they’re ignorant. But as these people retire and die off the next generation of electronic consumer will be very sophisticated and wont be ok with a 14 yr old telling us what usb is. These stores are screwed.

  13. zuzu says:

    That is capitalism’s number one flaw: it cannot reliably secure the needs of the people.

    My grocery store is amazing at predicting exactly what I want and it always has it available immediately on the shelf when I want it, at a low price I can afford.

    In fact, capitalism’s greatest benefit is that it adapts to the inherent uncertainty of the future in a soft real-time and distributed manner.

    What about Car Audio (formerly called The Roadshop before they dropped the exclusive title)?

    Circuit City does $12K worth of damage to a car while installing a GPS, won’t pay up

  14. Brian Carnell says:

    One of the reasons that people go to a store like Circuit City, rather than buying things on the Internet, is that they want to be able to talk to a knowledgeable salesperson.>

    I have yet to enter a Circuit City or Best Buy and encounter this mythical “knowledgeable salesperson.” I assume such sightings are to be classified in the same category as sightings of Bigfoot.

  15. jplkeekif says:

    I worked at Circuit City for a couple of years, the layoffs were a horrible plan.
    To get back on a couple of points that have been brought up, The Reverend asked about shrink rates, at our location and a couple of others that i know of, the amount of internal shrink went up after the older higher paid employees were laid off because the people they hired as replacements were all immature high school aged kids (As opposed to the older employees, most in their mid to late forties).
    As far as age discrimination goes, many of my old co-workers have actually brought up a class action suit against Circuit City (in the state of California). And it does seem like a pretty valid claim, all of the employees fired from my location were older.

  16. jplkeekif says:

    Also, another reason why there has been a huge decline in the availability of knowledgeable sales people is because of a change made to their training program, now rather than being broken down into 6 departments each with it’s own specialized training, the store is broken up into 2 general departments. Also, most of the older higher paid associates were the biggest source of training for new associates in terms of sales strategy, and (here’s the big part) customer service skills. You would be surprised at how much worse customers get treated in new stores compared to how they were treated in the past. I had employees and managers that would pride themselves in their ability to take an angry upset customer and help them so that they would walk away with a smile, this doesn’t happen with new management.

  17. Antinous says:

    Can we introduce a culture of corporate seppuku? Please?

  18. Anonymous says:

    The part that I still don’t understand, is how executives and board members can still get bonuses when the business they’re supposed to be managing is doing badly. Where is the money coming from?

    I’m starting to think there should simply be some kind of law where any bonuses of that nature could only be tied to company performance. That system could still be manipulated, but probably only to a lesser degree.

    Oh well, it’s not like such a law is in any way likely to pass.

  19. mjb523 says:

    If they would have reduced executive compensation by a fraction they would have saved the same amount of money and had no impact on their store’s operations and could have earned points with consumers. Instead they sent the message that they are not interested in providing service. That is what set them apart in my eyes and I haven’t shopped there since the announcement. They eliminated the only edge they had to get my business.

  20. bwcbwc says:

    Old stuff, but I have to say that the problem isn’t capitalism, it’s corporate governance. The issue of executive pay isn’t subject to market forces due to collusion of the board and the executives. If the shareholders paid any attention, and had the money to wage a proxy fight, they could bring executive compensation to heel.

  21. tomic says:

    Circuit Shitty has been bad for years — genuine, for-real bait-n-switch, misrepresentation, ‘let me see what’s in stock’… and same products as all the other merchants. BFD.

    It’s not a failure mode. It’s a way to suck out cash. See Who Gains. There’s this assumption that all businesses are in it for the long haul, growth longevity and prosperity, etc… but the game is really about making as much spendable cash ASAP and spending next month’s rent money (when it’s really someone else’s) is better at that.

    There are reasonable businesses, of course, but few of them are publically traded.

  22. Anonymous says:

    Ive been working for circuit city for 4 years now and the decisions that they make have to be the worst i ever seen someone make. How are they going to lay off people that have been working for the company for years?? (obiviouly if someone is getting paid $14 to $20 its because they have gotten raises that accumulated to that amount cuz u start at max $10) if you worked at the store for that long you already have customers that come in and when they need something they want to be helped by you. (loyal customer) by you letting this salesperson go that has worked there for a few years most likely you loosing a few douzen customers as well.

    Now they have something called CFA1 and CFA2 (which is a division between the departments which doesnt make sense at all) CFA1 covers TV’s and Home Audio, while CFA2 covers Camers,Computers, GPS, Music/movies. Now that was the worst idea ever because now you have 2 people working on CFA1 while theres 3 or 4 on CFA2. Now the issue comes in when no one seems to like to sell dvd/cd everyone wants to sell computers, so now theres awhole bunch of lost customers in the movie department when theres no one to help them so at this point theres people customers being ignored that wont come back after such a bad experience, now theres also 3 CFA2 associates just chatting with each other because they can basically go anywhere in the store without leaving their departments which is “CFA2″

    And when you thought things couldnt get any worst CFA1 associates started getting paid commition when nobodyelse does (except for car electronics installers) so now if you work on a deptartment that doesnt work commition you can care less you actually dont care at all, why should you care about helping customers when theres someone on the other side of the store doing the samething as you but they actually get a cut from what they sell. Why should you sell services, extended warranties and etc to customers when you know your not getting nothing out of it when others are. You will feel like the black sheep in the family. This is just my point of view at least from my store in NJ

  23. Anonymous says:

    This is the one failing on the capitalist system; it’s OK to do that, and there is no upper bound on individual Greed or short-termism from the people at the top. (ok, there is no explicit bound on the greed of the people at the bottom either, though their ability to cause damage is somewhat limited)

    Actually, the market economy is functioning perfectly here: Circuit City made a boneheaded decision to save them a few bucks but have ended up losing a *ton* more as their sales have declined, their stock price has plummeted and along with it their market cap. They’ve also become a laughing stock and could end up being a poster child for corporate hubris along with Enron and the like.

    Bottom line is that they did something stupid and the market’s response validated that fact and punished them for it financially and in terms of their reputation.

  24. jphilby says:

    This sort of short-sightedness is not limited to business. Many school districts save money by harassing or otherwise driving out the $35K teachers with decades of experience and replacing them with $20K teachers.

    Teacher experience, quality or popularity are seldom stoppers for the kind of administrators who stoop to such tactics. There’s no “bottom line” to let parents know their children are victims of these “cost cuts”.

    So long as the dollar is the “objective” measure of so much in our lives, humanity continues to pay in quality and quantity of life.

  25. noromdiam says:

    I’ve seen this happen at REI too based on my friends who were long time REI employees. They were forced out when the store management started taking hours away from senior sales associates.

    But one especially alarming example of this practice is when another friend was shopping for climbing harness at REI and received bad buying advice from a sales associate. When it comes to climbing gear, this really could be the difference between life or death.

  26. chris says:

    I’ve found BestBuy to be just as bad with bait and switch. As solid proof, go google articles on how they had a complete duplicate of their external website accessable from the inside of the stores.

    Strangely, the sale prices on the internal website weren’t matching those of the outside website. The sad thing is that the average employee had no clue this was going on so they’d just deny the website price.

    If you DO shop BestBuy, be sure to bring a printout of the website page with the date/time on it. It would also be good to get the BestBuy IP address and use that in the in-store computer’s browser instead of the bestbuy.com name. It will be a real education to the employee …

  27. Anonymous says:

    Knowledgeable salespeople? Come on, if you’re working at a retail store, you’re the bottom of the barrel. Do people shop at McDonalds for knowledgeable advice on hamburgers?

  28. Anonymous says:

    I’ve started to refer to most of the sales staff at most major retail outlets as “sales prevention associates”. Misinformation, sleazy used-car-peddler tactics and pissy, condescending attitudes are too often the norm… and that’s if you can get a response at all.

    I’ve had to practically BEG sales and service staff to do their jobs… basics like asking me what my needs are, telling me what the differences are between the items they offer… not to mention simply prying their attention away from their friends, cell phones or the internet. I’ve often stood in amazement… “I came here of my own volition… you have what I desire… I have money I’d like to throw at you… mmmm, cash money! An easy sale awaits… all you need to do is DO YOUR F&%#ING JOB.” Unbelievable.

    I’ve grudgingly become used to doing my own research, becoming my own expert and just ordering stuff online and having it shipped. It’s not my preference… I’d just as soon work in person with a vendor who has good, sound information and some basic social skills, not to mention that I’m one of those folks who like to lay my hands on the merch before I buy… but I’m sick of being treated like crap and having my time and money wasted.

    Ah, but perhaps having me go online in sheer frustration is the master plan after all? Cuts down on all that brick-n-mortar overhead and those pesky humans you pay $9.00 per to, right? FEH. May you choke to death in the cesspit of your own greed, you evil corporate bastards.

  29. Jack says:

    @ #2 [DANEGELD]
    “This is the one failing on the capitalist system; it’s OK to do that, and there is no upper bound on individual Greed or short-termism from the people at the top.”

    How exactly is it a failing of the system? The company did indeed chop heads to save money. And for a very short amount of time this worked. But in a short amount of time after that, the company finds itself royally screwed. If anything capitalism is working to kill off this kind of business practice. Underpaid workers steal from the company causing “internal bleeding” and customers who are sick of the lack of service and utter bone-headedness of the staff leave and “vote with their wallet” by buying elsewhere.

    As much as I get a bit overwhelmed at the Apple store when I walk in one, I find the place is perfect for non-tech consumers for many levels. Even if the geniuses are far from being genius they are far more helpful and knowledgeable than most any other retail chain. Between classes and one-on-one sessions they try do what “old school” stores used to do as a matter of course: treat customers as people and help them.

    I think other retailers really need to take heed beyond this. Is there any electronics store out there that doesn’t treat customers as sacks of meat who need to buy and consume or be eyed as potential thieves?

  30. Anonymous says:

    @Danegeld
    This is the *good* thing about
    capitalism – it treats companies
    like independent entities, able
    to make their own decisions and
    their own mistakes. This creates
    a self-correcting system where
    companies that make bad decisions
    burn out in favor of companies
    that make good decisions. The
    ecosphere learns from the mistakes
    of others and better systems
    result.
    Cory Michael McKenna

  31. Anonymous says:

    I worked at an OfficeMax during college, just a standard stockboy kind of part-time job during a summer to cover rent during the break.

    They hired a lot of the low-end computer science kids to sell computers at the store, getting commissions for selling the extended warranty plans. The problem was, though they knew something about code, they knew nothing about sales, hardware or really even how to talk to people without being condescending pricks.

    It got to a point where the customers would get frustrated with the sales guys while I was stocking fax paper in the shelves next to them, and I’d pipe in with something useful and take over the sale, and try to hand it back to the original guy at the end.

    Of course, once or twice, I’d have stolen the sale from the commission guys, so I got reported to management and moved to the software stockroom — a locked closet behind the manager’s office.

    I quit a week later and made twice as much waiting tables at a local pizza joint.

    Management — universally stupid.

  32. BdgBill says:

    I support Circuit City’s decision.

    I have never met a useful salesperson in my life. Even before the internet I always did research before making big-ticket purchases. Invariably, sales people tell me things I know to be incorrect or just outright lies.

    The best example of this at the moment is the very hard sell for expensive HDMI cables you must suffer through at any big box retailer when buying an HDTV.

    I do not want to pay for a so called “knowledgeable salesperson”. Just make sure there is some kid in a blue, red, or yellow polo shirt nearby to go get my stuff and ring me up.

    I just picked up a 50″ Plasma TV at CC for $1200.00. The same tv was $1999.00 at Best Buy. For all I care they can use trained monkeys for salepeople at those prices.

  33. Anonymous says:

    My brother-in-law had some wonderful discussions with dolts at Circuit City.

  34. monopole says:

    Jack @32
    Take a look at the chart on this link:
    http://www.washingtonmonthly.com/archives/individual/2007_12/012733.php
    and then get back to me about limiting individual greed.

    When you have executives who get yearly compensation in excess of what multiple employees make over their lifetimes when the company is failing the system is flat out broken. It’s no longer capitalism it’s literal kleptocracy.

  35. Narual says:

    They could fire the whole staff and replace them with ring tailed lemurs and I’d still shop at Circuit City before Best Buy. I’ve never once gone into a best buy without standing in line for at least 15 minutes because they won’t let you check out anywhere except the front, it’s constantly understaffed and the people there are busy trying to sell unnecessary extra warranties to schmucks to actually check people out.

    Circuit city I can usually just flag down some rep and he’ll check me out at the nearest counter, or if they’re busy they’ll send me to the front of the store where I might have to wait in line 3 or 4 minutes.

    Of course, 90% of the time I shop at zipzoomfly/geeks/directron/newegg/cablewholesale, but sometimes you need it *now*

  36. Jack says:

    @ #33 [MONOPOLE]
    I don’t disagree with your points, but you’re mixing up issues.

    I think the larger issue is a consolidated global market where it is practically impossible for “mom and pop” (I hate that term but there is no better one) businesses to survive. Thus if you are an electronics expert you no longer have the choice of opening your own business. Thus you are left with no options but to either (1) work for a place like Circuit City which will barely fulfill your needs or (2) abandon your skills to get a job to pay the bills.

    My honest opinion is if a new small business market can evolve in the modern world that would counter the overcompensation to the top CEOs of these consolidated messes of companies.

    Why would someone work for $9 an hour at CC when instead they could truly run and own their own business?

  37. Kyle Armbruster says:

    This is actually part of a major problem with our civilization now. The rich are getting richer, regardless of the work they do, and the poor are getting poorer, again regardless of the work they do. Our meritocracy, which we struggled as a society so hard to establish, is currently under fire by the same old feudal tyrant types as those who plunged us into the Dark Ages.

    These idiots are probably perfectly nice guys and gals, just doing what is in their best interest. But without legal restrictions, all the money in the world will be sucked into the black hole of the wealthy. There is no upper limit on wealth. There is, however, one on poverty: starvation.

    As an educated, middle-class academic (oh, BTW, yeah, I’ve worked in the corporate world and the academic world–the academic world is so much crazier it’s unimaginable), this concerns me because I’m actually closer to the “rich” end of the “rich-poor” spectrum; not like these guys are, of course, but I have investments and I am moving up, not down. People on this end of the spectrum are the ones who find their necks in the guillotine when the shit hits the fan. We regulate primarily not because we’re nice people (which we very well may be, regardless), but because if we don’t, the poor cut off our heads.

  38. Jack says:

    @ #35 [KYLE]
    I think what you’re more upset about is the death of the American middle-class. Which I think also falls in line with the modern world of retail.

    It’s hard to imagine nowadays that someone could establish a humble neighborhood business—like a grocery store—as little as 30 years ago and forge a life on it. Nowadays it’s harder to do the same. And then suddenly Whole Foods moves in and kills off your customer base and what’s left? Being in charge of an aisle of produce as a worker instead of being an owner/proprietor?

  39. jmmcdermott says:

    these guys and gals, with their skillz, don’t just fall off a map now.

    now these talented, hard-working folks who just got screwed have a real impetus to get the hell out of retail.

    i, for one, have never counted on retail staff to have any knowledge, whatsoever.

    these guys and gals should land on their feet. they didn’t get to 14 bucks an hour in retail by sucking. now, maybe, they’ll stop working for a company that sucks, and find an actual, viable, useful outlet for those skillz.

  40. Anonymous says:

    To those who ask how it is a “failure of capitalism,” the answer is very simple: capitalism failed to protect the livelihood of those whose jobs were lost. Yes, in the grand scheme of things, capitalism worked like it is supposed to–Circuit City was punished for trying to get away with a non-sense strategy. But, in the interim, people were hurt. That is capitalism’s number one flaw: it cannot reliably secure the needs of the people.

    I have no doubt of it’s ability to work, I only question as to whether or not it can work well.

  41. Alys says:

    The Source (by CC) store nearest to me has had some helpful sales people, but I rarely ever expect sales people in retail in general to be very smart. The turnover rate in retail jobs here (from what I can tell) is pretty stepp, and even in my current job, the long-lived employees have only been there 1.5yrs.

    These days I usually do my research online, then figure out what store might have what I need.

  42. Sunfell says:

    I worked for CC between ’95 and ’99- back when the sales people were commissioned. The computer department where I worked did about half the business in the store, and we did have a good reputation as knowledgable sales people. Sometimes that would backfire, as people would come in, pick our brains, then buy their systems somewhere else. But I did pretty good for the first 3 or so years.

    Then they started reducing the commissions. I ended up having to work twice as much to make half as much. I saw the handwriting on the wall, and landed a state job in computer support. It wasn’t long after that CC fired our top remaining salespeople. Had I been there, I would have been on the street, too.

    They did it again with their management staff last winter. My best friend’s husband was caught up in that mess. They gave him some decent severance pay, then had the gall to ask him to come back at half what he made. He declined.

    I had some CC stocks, and sold them before they tanked. I’m not sure if they’re going to make it this time- last time I was in there, nobody was able to answer my fairly simple questions about the computers they had. The store was a mess, and the sales people were nowhere to be found.

    The irony is that with the digital tv changeover coming in a little over a year, salespeople who know what they’re talking about are precious commodities. CC is going to lose big on that.

  43. bibliogrrl says:

    (This is related, but also tangential, bear with me?)

    Coming from a former retail monkey, I have to throw in.

    I wasn’t in electronics or computers, I was a Bookstore girl, and I knew my stuff. To be honest, if I could make a living wage selling books, I would be back at it in a hot second. I’m apparently a total masochist, but I loved my job, and I miss it horribly.

    I left retail selling because:

    a- The wages were terrible. As lower management, I was making less than 25k a year. Horrifying. Moving up into management would have meant managing inventory and people, and not dealing with customers, which is why I was THERE. I didn’t want any part of that. If the only reason I was going to deal with customers was going to be diffusing bad situations, I didn’t want any part of it.

    b- Any more these days, you are no longer selling a product (and this applies to almost any store you go into, IMO) you are selling a LIFESTYLE. I didn’t want to push a Preferred Customer card. I didn’t want to push DVDs. As a customer, I didn’t want to have those things pushed on me, why should I force them on others? I was there to sell books, and tell people what awesome books were new.

    Yeah. I’m going back to school for library and information science this year. I think it might be a better fit. I realize the corporations need to make money, but there ARE some of us in the retail sector who know are stuff, and who DO care, and who DO want you to get what you are looking for. The companies just tend to either grind it out of us, or get rid of us. By the time I left the chain I worked for, it was a terrible place to be… and it DID NOT start out that way.

  44. allyrx7 says:

    CC is doing the same with the Firedog program. My husband was a Firedog home theater contractor until they found a cheaper replacement. Of course, the cheap replacement was trained by my husband.

    We learned that CC now gets approximately 45% of its store profit from Firedog and warranties. They’re having to compete hard for prices on the electronics, and have to make up the profit somewhere (unlike other places, where things like appliances help boost the bottom line). At least half of the price you pay for the Firedog service is pure profit, skimmed off the top. In some markets (like ours) Firedog installers are subcontractors with varying levels of expertise. My husband has 11 years; the new guy has 4 months.

    It pays to ask who’ll be installing your TV. I can’t tell you how many calls my husband had to fix for other installers in the region. If you’re buying a television, it may be worth your time to find a local yokel who knows what he’s doing. My husband’s customers save an average of $250.

  45. Richard says:

    Nice to see America is still using the “race to the bottom” and the “I’m all right Jack” version of capitalism. I can understand why there is a rebellion against this distorted version of capitalism but I cant help but feel its to late. The citizens of America should have never allowed their leaders to hand their nation to a group of amoral corporate executives.

  46. angry young man says:

    I went to the Circuit City in Union, NJ on Rte 22 yesterday to listen to some center channel speakers; I’ve been agonizing over which to buy. They have a shoddy room with tons of speakers and a nice computer interface to mix and match between them. I figured out how to use the interface while waiting for someone to help me because I couldn’t get the stereo to work. When someone didn’t show, I found the closest guy. He couldn’t get the stereo in the room to play either . He got another guy who said one of the speakers must have blown and that puts the whole room out of commission. He did steer me towards the most expensive center channel, though, until I said my system was a different brand, then he steered me toward that brand, which seemed the more honest advice.

    I’d have taken that as a lesson about how lousy Circuit City is, but PC Richard farther down 22 was no better. The sales guy was so clueless about what a center channel even was, his fellow sales person said twice in front of me, “You work here. How could you not know this?” Another customer finally had to step in to get the speakers to work; he told me sotto voce to go to Sixth Avenue Electronics.

    I didn’t have time, but I found myself today at the Bose store in the Short Hills Mall. The first sales guy also couldn’t get the stereo with the center channel I wanted to work. He and the next guy, who did get it to work, both had no explanation for why I should buy a Bose beyond “You’ll know why when you hear it.” And you’d think they’d set up the center channel with a TV so you can hear the vocals instead of with a lame Xmas album on a CD player in the hallway when you have to stand 3′ away.

    I also went to Best Buy, of course, where I was steered toward a brand called Definitive that cost the same as the Bose, but which, I found out later, has garnered zero reviews at any online retailer or in any magazine. I was told that the Definitive was better because its speakers weren’t made of paper but from “leather,” it had a “wider range” (that is, as the sales guy demonstrated, you could hear it from the side) and there was more bass, which would be good, I suppose, if I were holding a house party.

    In all cases I was reminded of my experience at Comp USA years ago when I was considering what computer to buy. I asked a sales guy, What are the specs on this computer? He read me what was printed on the box. Hopefully all the places above go the way of Circuit City. I’ll probably buy from J&R or B&H, where I’ve had much better experiences.

  47. serotonin says:

    I’ve found salespeople (at least in terms of computers, electronics, cars) essentially obsolete ever since I first got internet in ’96.

    Something like this at Circuit City wouldn’t have any effect on how I go about purchases. In fact, something that I’ve come to dislike about smaller chain electronics stores is that they haven’t properly adapted to the online era.

    For me it’s a store’s website that is the best salesperson. A lot of the smaller chains will never have my business because I can’t be bother to travel around to 4-5 other non-chain stores or listen to salespeople go through something I’d rather read myself (it’s like being forced to listen to a book on tape) all for a product that likely will not be cheaper then Best Buy.

    You can find out so much about a product from the internet, including reading multiple detailed reviews on products (perhaps from sites that you’ve developed a trust for instead of a random clerk at -any- store), check prices, and form your own opinion.

  48. totorodoo says:

    While I agree with the article. I find the Best Buy ads a little odd. Conspiracy anyone?

  49. killjoy_7 says:

    I just left Circuit City after three years for a real job. Allow me to tell you CC’s policies and general attitude toward their floor associates is absolutely disgusting.

    Now, many of you can label us as “bottom of the barrel” retail associates as much as you like, you’re entitled to your opinion. However, It is my opinion that I could talk you under the table about a computer, TV, etc. and tell you way more than you ever cared to know. There was rarely a customer that came in that knew more than I did. I think many of you grossly over-estimate the average American’s tech proficiency level.

    Problem is two fold. You’re a $9-an-hour associate sandwiched between two generally impatient and often completely disrespectful forces. One is management, the other is the average customer base. No, every customer is not that way, nor is every manager. Even if they were, it was my job to give every customer the best service I could and I respected that.

    And yes, I got more than my fair share of self-proclaimed 2-day sudden expert customer types (like many here it would seem), and those were typically the rudest ones that needed to be silenced by 10 or so minutes of involuntary (on their part) explanations by yours truly of dual core processors, FSB’s (how many of you “experts” can even tell me what that is?), video chip types, and hard drive RPMs.

    Are these things really important to the average consumer? Usually not. It was just my way of saying “yes, believe it or not, as stupid as you believe me to be, I do in fact know infinitely more than you about this machine or any other, so can we get on with it?”

    That is simply one view expressed by one idiot associate. More on topic, CC deserves every bit of what they’re faced with and more. After the firings, the traffic in my store decreased to a point where it was downright laughable. Then you have management threatening your job everyday in e-mails and breathing down your neck to achieve impossible sales goals measured against the amount of traffic coming in. If you don’t sell warranties, you’re useless. If you don’t sell Firedog, you’re useless.

    It’s basically a trickle-down effect, where you as the associate are of course responsible for everything that’s wrong with the company, and if you don’t get started right away in fixing something that’s impossible to fix, you’re fired.
    Nobody getting paid $7.75-$9 an hour should have to put up with that. But that’s their failing. Cutting all those people and then expecting the ones that were left (as well as the customers) to be too stupid to know better.

    Circuit City can kiss my new $60,000 a year ass.

  50. bardfinn says:

    @29:

    When was the last time you had Circuit City over for a dinner party? When was the last time you sent Circuit City holiday snaps?

    It’s NOT working perfectly: It’s allowing greedy executives to hide behind a (throw-away) corporate reputation. Each of those executives is profiting, immensely, at the expense of shareholders, workers, store management, and customers. Not content to skip a trip to Vail this year, they destroy the livings of hundreds.

    “Circuit City” does not care about the reputation of “Circuit City”. The executives only care about looting it and letting the corporate brand take the hits to ‘reputation’.

  51. Simon Greenwood says:

    I think it’s the same the world over. Here in the UK staff at PCWorld or Currys or Comet are generally just sales staff. Some have an interest in particular fields such as home theatre or cameras but most are more interested in selling you the three year extended warranty as that’s where they get the commission. Next year they might be selling shoes or mobile phones. Maplin, who essentially replaced Radio Shack, are a little better as they employ a few enthusiasts or people who have been trained in their parts side, but on the whole it’s better to be prepared and do your homework before looking as they all have quotas as well and would rather send you with that Packard Bell laptop with the three year warranty rather than a Mac Mini that’s going cheap in the end of line corner.

  52. Mikey Likes BoingBoing says:

    It’s funny in hindsight how Circuit City is deified as an outstanding company, in the business book “Good to Great” by Jim Collins, regarded by many pundits as one of the best business books ever.

    But that was then and this is now. This isn’t the first time a business book has praided a company up and down, only for that company to tank for mismanagement, greed, or even outright fraud.

    This is one reason why, even though I am in business, I hate “business books.” Most of them are a complete waste of paper.

  53. Mikey Likes BoingBoing says:

    Replace: “praided” with praised

  54. taylorjh says:

    This is incredible! Several years ago when I was shopping for a 50 inch HD ready wide-screen TV, I shopped around extensively on the internet and in stores. This is while DLP’s were new, plasma screens were having a problem with burnout, rear-screen projection systems were passe. I ended up buying a LCD Projection system which we still have and have been very pleased with.

    Circuit City stood out from all other stores because they had the largest selection of TV’s on display and, unlike Best Buy and others, every one of theirs was tuned to show its best capabilities. Best Buy and others appeared to simply have taken the sets out of the box, thrown them on the shelf and turned them on. There was no comparison in terms of the customer support that Circuit City was providing.

    And, they agreed to meet an Internet price that I brought evidence of, telling me that they didn’t do that, but meeting it on a full cost of delivery basis.

    I am disappointed at their decline!

  55. msspurlock says:

    Will the industry learn from this lesson?
    No.
    Because they have pinhead MBAs at the top instead of people who know the business.
    Empty suits and bean counters.
    They deserve to “die” and not be rehired by anyone else.
    It’s just too bad their older employees have to suffer.

  56. slywy says:

    [quote}I have yet to enter a Circuit City or Best Buy and encounter this mythical "knowledgeable salesperson." I assume such sightings are to be classified in the same category as sightings of Bigfoot.[/quote]

    A Best Buy person tried to tell me all about routers until she figured out I knew more about them.

  57. The Reverend says:

    “I think the larger issue is a consolidated global market where it is practically impossible for “mom and pop” … businesses to survive. …if a new small business market can evolve in the modern world …”

    Here’s your business plan:
    1) Forget price- you WON’T WIN. Focus on quality- There are plenty of people who are wising up to the actual worth of what they buy at the chains.

    2) I run a woodworking business out of my garage. I make stuff for a small but dedicated niche market. (That I have been an active member of for 20 years) The big chains do everything, and do it half-assed. You can do one thing well enough that people go out of their way to get to you.

    A true anecdote from my home town:
    When the Home Depot moved into our town, two of the three neighborhood hardware stores closed. The third actually SHARES A PARKING LOT with HD, and is still in business. Two struggled to compete with HD’s prices while selling the same merchandise. Brock’s shopped around HD and revamped their own plan. HD carries Ryobi and Black&Decker, Brock’s carries Porter Cable and Bosch. HD has granite countertops, Brock’s has marble. More importantly, their staff SERIOUSLY knows what they’re doing, and I would guess makes 3 times what the peons across the lot make. Result? Every contractor in the area goes to HD, picks up 2x4s and drywall, then over to Brock’s for their tools, cabinets, and finishing materials. Since HD moved in, Brock’s has expanded twice, and is pulling in the biggest profits in their history.

  58. gobo says:

    The last time I was in a Circuit City, I was looking at portable CD players (which should tell you how long ago it was). I was trying a CD in a couple of different ones to see if there was any sound difference between the $40 one and the $70 one, when I noticed a button on one that said DESC on it in high-techy letters.

    I asked the salesperson what that button did.

    He looked at it for a sec, stared at me, and said “DESC! It a COMPACT DESC PLAYA!”

  59. stpete420 says:

    danegeld: AMEN!

  60. mark says:

    The theory behind the move was that circuit city was basically an order-taking business, not a sales business. Basically they thought that the losses in upselling caused by having less competent staff would be offset by having lower overhead. However, given the fact that the only profit centers in that business are accessory and extended warranty sales, it is difficult to see how this is possible. If, as common sense would seem to dictate, this completely wrecks the company then I suspect that most of the architects of this strategy will find themselves rather difficult to employ in the retail space. That said, those types of policy decisions are usually made by only a few people, in this case I have to assume people with an accounting rather than retail background. As a result they won’t have to find a job with a retail company anyway. So the only people who will really get hurt are the competent floor employees who got fired, the less competent floor employees who will be out of a job when the company falls apart, and the stockholders.

  61. WillyC says:

    What amazes me is that they did the exact same thing some years ago, with similar results. Up until then, I thought the new executives were implementing some great plans. But then that one came down the pike and bang, it all went to crap again. Even more silly is that they UNDERESTIMATED the effects this move would have on their sales!

    A couple of comments -

    - Note that the millions that the execs are supposed to get are retention bonuses. These are only paid if they are with the company at a set time in the future (like 2010 or something like that). If they leave before then, they get nada. It’s still wrong, and in the context of all the other stupid things they’ve done this year it looks like Enron 2.0.

    - It’s not safe to assume that ALL of the high-paid associates were the best performers. There were plenty of them that were milking CC for a nice wage with little or no effort on their part to make things better. But as a whole, the move was stupid because many of these guys were great employees, some of them were the glue holding some stores together!

    - Another thing that amazes me is that this move had the worst effect on the business that is most critical to their success – TVs! Not only did they get rid of a bunch of great TV sales people, they did it at a time where they needed this differentiation from the big guys like Walmart and Costco who have been getting into TVs as of late. Having good salespeople would have been a great advantage vs. those two giants.

    I quit CC about a year ago and believe I got out at the right time. I’m rooting for them since I still have a lot of stake in the company, but I feel this year may be CCs last as an independent company…..

  62. The Reverend says:

    What I want to see is thier shrinkage figures!

    I mean, if youj worked at a company that fired you for being a good employee and then hired you back at a lower rate? If you were desperate enough for work to go back, would you really care if you caught someone stealing? Would you feel justified in doing it yourself? I bet 90% of the assistant managers there would look the other way if they saw a coworker loading up a truck at the back door.

    Way to run a business…

  63. danegeld says:

    This is the one failing on the capitalist system; it’s OK to do that, and there is no upper bound on individual Greed or short-termism from the people at the top. (ok, there is no explicit bound on the greed of the people at the bottom either, though their ability to cause damage is somewhat limited)

    I think the credit crunch could be explained in much the same way — it made financial sense on an “individual scale” for all of the people involved in setting the targets, and for the people handing out the loans to be hitting this years target, collecting this years bonus and “growing ahead of the market”, even if it might result in disaster at the large scale somewhere down the line.

    The society that we’ve engineered with high employee mobility means that most people and most firms don’t consider the future too seriously, because they’ll be working some place else by the time the shit hits the fan, or will have collected a handsome payout to insulate them from the effects.

    I met up with some friends from college and was told about a guy who’d be joining us later, whose name we’ll disguise by the epithet “filthy Rich” – for allegedly hiring himself a prostitute for valentines day.

    anyways, this guy shows up and after a few beers is bragging about his new job as MD of a woodworking firm in the North of England, he’s expounding his plan to sell the land under the firm and lease it back, then lay off the staff over the course of a year or so and convert the premises into a housing development because he’ll make more money that way.

    Perhaps he was just hamming it up and perhaps he would be stopped if he tried it, but it didn’t fill me with joy about the prospects for our industries or the calibre and vision of our business leaders.

    I’m not sure what the sane response to this is, expect perhaps to work in the public sector or to find or found a company that is not headed by a bunch of immoral hypocrites? I’ve never considered myself a Communist before but a little purge could be just what’s in order. Pour encourager les autres.

  64. jplkeekif says:

    WillyC brings up a very good point, the importance of quality in a TV salesperson is huge. BestBuy realizes this which is why they have their Magnolia sales team which specializes in home theater sales (They’re paid pretty well compared to other sales people too). Circuit City is especially lacking in this area because of the layoffs, and their new training system cuts out a great deal information in exchange for a faster trainee period.

  65. Anonymous says:

    #2: I’m not sure what the sane response to this is, expect perhaps to work in the public sector…

    That’s pretty much my plan – well, academia rather than civil service or whatever, but it’s the same idea. I’m in the UK, not the US, but business works like that pretty much anywhere these days, I think.

  66. Thorzdad says:

    This is not a problem with capitalism…
    This sort of bad behaviour by executives is a problem with HUMAN BEINGS

    But that is exactly the nexus where modern capitalism lives and, ultimately, utterly falls on its face. Capitalism today, as exemplified by the sort of short-term, maximum-profits-above-all-else business model we see today, almost seems to depend on human greed and arrogance to function according to theory.

  67. Anonymous says:

    Here’s another reason Circuit City sucks. My girlfriend got me XM satelite radio for Xmas online with the option to pick it up at a local CC store. When she went they told her they didn’t have any in stock (despite the website saying they did) and made her wait 45 minutes for a manager to show up to tell her what other store she could go to. When the manager finally did show up he went into the back room and came out with the radio and said WTF there’s a stack back there. Then when my girlfriend asked for the car adapter she ordered he asked her what it looked like so he could look.

  68. guruscotty says:

    Sounds like RadioShack all over again. Maybe the gobshites who raped and plundered RadioShack, will go over to Circuit City and suck all the marrow from it’s bones. Best Buy, Target and Wal•Mart must be giggling like mad.

    Until that is, those carpetbaggers have killed and buried those two companies, and get hired by the others. Then the layoffs, payoffs, and stupidity start all over again.

    Hope they stay away from target – one of the few stores I still like.

  69. decriss says:

    Even though they are “correcting” the problem, (I would like to know if the staff was hired back on at their previous rate)I’m more and more getting major purchases elsewhere. I’ve been looking at a camera for several weeks and I’ll probably get it from Dell since CC just took away the sale price. There’s no in store pick up to save on shipping so why bother with CC.
    Their Stock is in decline but I hope they stay in business. I’ll still go grab loss leaders without picking up other stuff, and it will keep competition with BB.

  70. teflon says:

    Well, this SOUNDS like an insane approach, but having recently been through a round of layoffs and being in management, I can explain some of the thought process here: If you’re going to lay off a bunch of your staff, its a clear sign that the company isn’t doing well (duh). This frequently leads to a brain-drain as the really talented employees (or executives) left behind who have all of the organizational knowledge and culture you want to preserve start to jump ship looking for a more stable or better job. Companies will typically cut staff then increase the compensation to those they want to retain to prevent them from jumping ship. In Circuit City’s case, I question the wisdom, but it could be argued that few people really need a “skilled” salesperson to sell consumer electronics (or at least that’s what CC is betting on). I hate to see anyone lose a job, but I was never impressed by their so-called “superior” sales force.

  71. Anonymous says:

    How did they find anyone to work for $9/hr? I don’t know about the rest of the country, but in Oregon, we are only a few weeks away from the minimum wage being raised to something just under $9 (I think it’s $8.75?). Why would you go through all the trouble when you can make about the same money pumping gas or flipping burgers?!

  72. mrw650 says:

    Isn’t there a law against…AGE DISCRIMINATION? Unfortunately if these were just “part-time” employees, they have no rights. Even the lawyers won’t take it on. It is up to Mother Government to prosecute Circuit City executives for discrimination, and they don’t want to do it either.

    Face it, there’s really “no justice for all” — especially for the little guy or gal in America–if there ever was!

  73. slywy says:

    “The good news is that this will now kill the company, preventing it from happening again”

    I’m afraid this isn’t true. It happens somewhere, in some variation, all the time. The cost of inexperience/the value of experience are too hidden compared to $X/hr. vs. $XX/hr. for most executives to get it. And what is an executive, anyway?

  74. David Bruce Murray says:

    “Knowledgeable sales staff”

    A couple of weeks ago, I went to a local movie theater and asked the theater manager if they would be getting _There Will Be Blood_. He said he’d never heard of it, and added that if he’d never heard of it being in the business as he was, it must be some tiny little indie film that would never be considered for viewing at a major theater chain.

    My experience shopping places like Circuit City and Best Buy has been similar. They often think they know more than they actually do and as a result, they’re often more insulting to customers than helpful.

  75. Anonymous says:

    The “firing the experienced and knowledgable staff” argument has one problem: In the past seven years during which I’ve worked around the corner from a Circuit City, I *never* found anyone on their staff I considered experienced or knowledgable.

    Maybe that location was ahead of the curve. Or maybe the preference for incompetent-but-cheap goes back farther than conjectured.

  76. Anonymous says:

    I’ve been laid off twice because of companies seeking profitability over sustainability. (Cendant and Chase Bank) In each case my department exceeded company goals for productivity in each quarter, which gave the company extra cash to purchase other, smaller companies whom they could consolidate and eliminate the now “redundant” staff.

    In the first case that meant the entire staff of the ten story building in which I was working (without notice, though I do admit there was a lot of bad luck in selling off companies to focus on a core business model based on the travel industry in mid-2001.) In the second case it meant laying off workers who had been with the company for over twenty years, after months and months of vague guessing at who was and was not going to be let go, which played out over and over again in small group firings.

    On a lighter note, why is Steve Correll going by the pseudonym “Dean Baker”?

  77. strider_mt2k says:

    Don’t get me started with Radio Shack.

    They haven’t had a clue since the TRS-80.

    (And they blew that too.)

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