Update 1-17-09
Two months later, Circuit City will be no more. I hope our Samsung LCD t.v. we purchased from them two years ago never fails.
Circuit City Stores Inc. begins liquidating its remaining 567 U.S. stores on Saturday, the largest retail casualty yet in a recession that is expected to claim more victims.
The electronics and digital-media retailer will be marking down goods by 10% to 30% with higher discounts as the expected April closing approaches. However, retail experts warned that liquidation discounts don’t often achieve the level of prior sales prices.
Aneil
Update 11-17-08:
Is it any wonder that Circuit City has filed for bankruptcy a week ago:
Struggling electronics chain Circuit City announced Monday that it has filed for chapter 11 bankruptcy.
Chapter 11 allows a company to hold off creditors while it attempts to restructure its finances. Circuit City said Monday that it has negotiated a commitment for a $1.1 billion debtor-in-possession revolving credit facility to supplement its working capital.
Circuit City announced earlier this month that it would shutter 155 stores and lay off 17 percent of its workforce. The retailer said Monday that it will eliminate an additional 700 positions in addition to the reductions resulting from the store closings, bringing the total layoff projection to around 20 percent of its employees. According to the company’s FAQ, in February it had approximately 45,900 employees, not including workers taken on during peak selling periods.
Now that Circuit City has filed for bankruptcy, I guess our next television will be purchased at Best Buy (we bought our first and only HDTV from Circuit City a couple of years ago, but since then we’ve done the bulk of our electronics and consumer durables purchasing at Best Buy because of their better service and selection.
Aneil
Original Post March 29, 2007:
Once again, it appears that firms still don’t know how to downsize effectively and humanely. Circuit City stores will be laying off 3400 of its more highly-paid employees and replacing them with entry-level employees who can be paid at lower wage rates:
Circuit City Stores Inc. announced a new wave of cost-cutting efforts as it battles larger, more efficient retailers amid intense competition for sales of flat-screen TVs and other electronics.
The Richmond, Va., retailer said it will replace 3,400 mostly store-level employees with lower-paid workers, contract out more of its information-technology operations, and consider options, including a possible sale, of its international business.
Circuit City spokesman Bill Cimino said the 3,400 layoffs follow a market-by-market review of wages for similar jobs. The review, by the company with help from outside parties, identified workers paid “well above the market-based salary range for their role,” the company said. Circuit City had 42,359 employees as of Feb. 28.
Those workers will be given severance packages, and Circuit City said it intends to replace them with employees compensated at “the current market range for the job.” Mr. Cimino wouldn’t provide specifics on the changes but called the practice “not an uncommon occurrence” among retailers.
“This is not a reduction in force,” he said. “We believe that the wages will be competitive within the marketplace.”
Allow me to disagree: this is a reduction in force, and a very poorly thought out one at that. I think Mr. Cimino is trying to pull a fast one on the general public, and I doubt that Circuit City employees will be persuaded or comforted one bit by Mr. Cimino’s statements. As I stated in my interview with Dow Jones News Service reporter Mary Ellen Lloyd, published today:
As I tell my MBA students each time we discuss the topic of downsizing, most organizations do a very poor job of measuring their human capital, and view all employees as expenses rather than investments. It’s no wonder they typically do a very poor job of downsizing, because they have little idea of which employees really add value to their firms, and which don’t.
Aneil
Total Trust 
It was a dumb move because they got rid of the
the people who have been in the industry for the
longest. The ones they got rid of were the ones
who could answer all the unanswered questions,
the people that made their numbers, and the ones
training new employees.
-former circuit city employee-
I used to be a customer of Circuit shitty.
-former circuit city customer-
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Its task is to make people capable of joint performance, to make their weaknesses irrelevant, says the Management Guru Peter Drucker. It creates harmony in working together – equilibrium in thoughts and actions, goals and achievements, plans and performance, products and markets. It resolves situations of scarcity, be they in the physical, technical or human fields, through maximum utilization with the minimum available processes to achieve the goal. Lack of management causes disorder, confusion, wastage, delay, destruction and even depression. Managing men, money and materials in the best possible way, according to circumstances and environment, is the most important and essential factor for a successful management.
This is a great post. The problem, as you pointed out, was the incompetence of management in the downsizing of the company. They do not have the slightest clue which employees add value and which don’t. So, they went for the cheapest. The recession was just the straw that broke the proverbial camel’s back.
I don’t think the closure affects your TV. It’s not like they would accept a return on a 2 year old TV or even service it. If you have one of their extended service warranties, it’s through a 3rd party insurance company.
I worked there a long time ago. Their troubles started at least 8-9 years ago. I was there when divx failed, they got rid of appliances, and the entire corporate philosophy changed at least 3 times a year.
They did the “let’s fire the best employees” thing at least twice- in 2003 and 2007. I had a friend who survived the 2003 layoffs because he wasn’t great at sales. After getting 13 or 14 raises he was laid off in 2007. Then after taking severance and being on unemployment they rehired him, promoted him to a supervisor role, and gave him a raise over the amount that was too high to keep him in the first place.
When i left they were obsessed with being a different version of Best Buy combined with Wal-Mart. That was almost 8 years ago. The corporate brainiacs decided that people liked Best Buy because everything was on the floor and their checkouts resembled supermarkets complete with impulse items. So they spent however many billions changing the layouts to get everything on the floor and ordered the tackiest checkout items. I remember opening boxes that Christmas and finding all this junk that looked too cheap for the Dollar Tree.
Many have speculated that Circuit City died because they weren’t concerned enough with best buy. But they were trying to “out Best Buy” Best Buy 8-9 years ago. Their 2000 rapid remodel was supposed to help compete with best Buy and their 2003 layoffs were because best Buy paid employees a lot less. Some of my former co-workers took jobs at Best Buy at 50-70% pay cuts.
Then in 2007, they decided they didn’t want to pay more than Wal-mart.
You will read conflicting opinions online. Some say that Circuit City employees that remained were low-paid and unhelpful. The comparison is often to best Buy employees being more helpful. However, the whole reason Circuit City cut wages was because Best Buy paid nothing. Best Buy was paying hourly workers $8/hr with no incentives at a time that Circuit City was paying commission and top sales people regularly made $15-30 hour.
I could be wrong, but opinion always has been that Circuit City lost by trying to be best Buy and Wal-Mart, instead of being Circuit City. The many drastic changes hurt morale and ultimately there was no reason for anyone of value to want to work there.
Circuit City was never my choice to go to the store never seemed inviting to me and one time i bought a tv hanger and it was missing stuff :( jerks