Comments on: Circuit City execs killed the company

Who's to blame for the electronics retailer's downfall? It should be placed squarely in the hands of its executives, who ran the business into the ground.

[murano22s]

I actually work at Circuit City, I can completely agree with this article. The executives in this company do what they can to destroy any associate moral, though they say they are trying to improve moral. I actually e-mailed the CEO, I wanted to speak to him about some ideas that may help improve the overall customer experience, and allow the associates to make more money, while actually making the company a profit, I never even received a response back. If Circuit City will not listen to the people that directly interact with the customers, how could they possibly survive?

[NazTech]

One does not simply e-mail the corporate CEO with ideas on improving company profits and increasing employee compensation unless one is a personal friend or trusted advisor .A few good ideas are not what is needed. A solid business plan looking at the big picture is needed. Besides, CEO's don't even know that store employees exist!

[MaggieRed]

This company failure is a shame because to me I preferred Circuit City over Best Buy and many who I've talked to, agree. We had a DVD player failure, was able to check online found two within the price range and in-stock at the local store and went down to pick it up. All my home entertainment systems came from these guys with best price and product, over all the others in the local area. Pleasant people to deal with at the stores as well.

[Galaxy5]

You missed the single biggest mistake Circuit City management made - firing experienced employees last year in order to re-hire less experienced workers at lower wages.

I think that was the single dumbest move CC ever made on its odyssey to reorganization. Fire your most knowledgeable and loyal employees...then hire greenhorns at half the hourly rate to replace them. Way to go, Circuit City!

[alegr]

Didn't CompUSA do that, as well?

[aj288]

I disagree entirely. The overcompensation came from a translation from commissioned to hourly pay rates, and in the end many of these people were being paid much more than they were worth to the company, dragging down profits and subsequently making price increases a necessity. For a brick-and-mortar retail store to be successful, pay needs to be based on performance and product knowledge, not how long you've stuck around with the company. Yes, loyalty means something - It means the company has paid you consistently for a long, long time, but that doesn't automatically mean you deserve more compensation than new hires if they know more and work harder than you do.

I hate to sound cruel, but I mean really, that's the situation most retailers have to face these days. There are plenty of knowledgeable, valuable employees that lost their jobs, yes, but that doesn't mean they all were and that doesn't mean they've somehow brought about the downfall of the company. As an employee, you have to stay competitive and prove your worth, and the same could be said for your employer.

[craigar]

<i>Can someone explain to me how home equity loans come into the equation when discussing the consumer's unwillingness to buy electronics?</>

This reporter doesn't have a clue as to what is happening in the world. PEAK CREDIT is the reason C.C. is failing and guess what? Best Buy's failure is just around the corner. Wake up reporter, we are all going down this path. Consumerism is dead. We will only be buying what we absolutely have to have.

And in answer to your question, since you don't know it. The stuff that Circuit City has been selling (Big Screen TV's and so on) have been paid for by the refinancing of Real Estate Bubble Housing prices. Plain and simple. There's no more income to be had from the price of homes going up. The income level of America has been stagnant for over a decade, only through home loans have folks been able to afford C.C. stuff. Same goes for Furniture and Lowes etc. Only what's needed will be bought. If you are in a business that sells stuff that isn't really needed, you might want to look for new work. At the very least, don't spend the money you now have on things you don't need, even if they are discounted at Circuit City's Bankruptcy sales. Don't take the bait.

[simbadogg]

if you think BB is going under...you're an idiot. BB is STILL making money, Amazon is STILL making money and selling electronics. I think you dont understand how a good business model is able to adjust on the fly to adverse conditions, and pull out for the better. Circuit City hasn't been able to do this in over 10 years, which is exactly why you've seen the rise of BB in that amount of time. and NO credit crunch would stop the purchase of goods from the likes of CC, BB, lowes, nordstrom etc. What you might get is a slow down, or a significant drop. But not the end of sales.

I used to work at BB, but i'm by no means biased in my opinion, i used to buy all my electronics at CC back when they actually had stores in my area. But the fact of the matter is this, rather than trying to come up w/ new business models, around 3-4 years ago CC was canning its managers at stores, and bringing on former BB managers for lucrative amounts of money. We're they trying to change their business...yes, credit to them. But how were they trying to do it? BY COPYING BEST BUY. this is the exact opposite of how they should have tackled the situation. Rather than moving towards the future, they were busy copying what worked yesterday. dumb dumb dumb.

[gggg sssss]

wonder what Obama will say to that

[craigar]

simbadogg,
Gee, I'm an idiot. Less than 24 hours after my prediction on my post that Best Buy is next. The No. 1 U.S. electronics chain, slashed its fiscal 2009 profit forecast on Wednesday, driven by weak consumer spending heading into the crucial holiday selling season. Wait until the next quarter's report. It won't be long now. Like I said. The stuff that they sell isn't needed. How many Big Screen TV's do you think will sell during a Depression? If you think Obama is the answer, then you are blind. Obama thinks that bailing out GM and Ford will help. Hey why not Circuit City?? After all it's simply poor management like the Big Banks. WRONG! It's the end of Credit! The end of credit means the end of Americans buying things, because that's the only way they've known.

[techie_curmudgeon]

I think the end became inevitable when they dumped all their highest-paid sales staff. Hey Dummy! Highly paid salespeople get that way because they're GOOD AT IT!

If you have highly-paid sales staff that aren't good at it, guess who's fault that is?

I've never worked at CC, and once they dumped the staff I refused to shop there. Sorry guys, but I don't reward morons.

[jakey58]

I am glad for your support, you see I was one of the those high paid employees that got the boot one year ago. I
gave CC. almost 10 years, I ran customer service not the managers, their most important job for the day was what
they should have for breakfast, lunch and dinner, while I dealt with all the customer service issues, sometimes
I would be on the phone troubleshooting for customers for more than an hour and at the same time ringing up
customers while I was on hold. Some customers would come in only on the days I worked because they knew
I would get the job done. Most of the employees that got fired with me could run the store. Some of the managers
were very young and some would drink on the job with other associates. But thats what CC wanted, and guess
what going bankrupt is what they deserved and got. I haven't shopped at CC and never will again. So long CC.

[drdogbath33]

I used to work at BB and now work at CC and I can tell you right now that I don't appreciate being called a moron. Yes, I believe it was a bad idea to fire the most experienced employees all at the same time but that does not mean the people replacing them were incompetent by any means. People also need to understand that it's not like the company just started over with people who had never been in the busines running the stores. I get that it is a bad message firing such experienced employees but I guarantee abandoning Circuit City as a consumer is not the answer. What do you think will happen to retail prices if Best Buy is the only game in town? Do you think that out of the kindness of their hearts they'll ignore basic principles of economics and keep prices low? Of course they won't. They will be making more profit than ever because they will be able force vendors to sell low while they charge customers whatever they want with no competition for either the vendor or consumer to bargain with.

[crileyma]

Something's missing here. You repeatedly state that the executives killed the company, but neglect to supply even one specific example, instead citing multiple instances of executive blame-throwing.

I'm perfectly willing to consider your premise--and I have no dog in this fight--but some kind of backup anecdotes, procedures, decisions, etc. needs to be provided. I kept waiting for some analysis of CC's failed business model or actions to be presented, but came away with nothing.

[c|net Reader]

That is my take on the story as well. It is nothing but an opinion piece and not a good one at that. The executives may well have ruined the company through actions such as those mentioned in the comments, but the story should have made those points.

[techman21]

I agree - not one concrete example is given in the article. Plenty of effects, but no causes.

Agreed, cite even one specific example to make your point.

[The_Decider]

You guys are geniuses.

Writing under the tagline: "Don Reisinger's take on tech closest to home" and yet you guy somehow figure out that it is an opinion piece.

Bravo.

If you have been paying attention, you wouldn't need Don to tell you all the missteps they have made.

[wec207]

Specific Examples:
1. Firing commissioned well informed employees
2, Hiring inexperienced employees
3, Not properly training new employees
4. No incentive for good employees
5, No espirit de corps "Can Do." attitutude, morale training
6. Continued expansion of stores even though there was an obvious downturn in sales
7. Not controlling perks for senior management Two (2) company owned jets.
8. Lucrative bonuses even though the company was not making $
9. Voting themselves Golden Parachutes for themselves when they Knew they were failing.
10. Not taking advantage of a possible purchase by Blockbuster Video

Do you need more, let me know.

[mellowde]

I say good riddance. Went into their store here in Abilene TX last spring to purchase a complete computer system. Needed two but wanted to buy one at a time to make sure what I purchased was useable. When I got home with it, found it was no functional and upon return was told I'd have to pay a 15 percent "restocking fee" to make the return as they had no replacement in stock. I kept the monitor and printer and returned only the CPU unit to avoid some of the fee they charge. Cost me $45.00. I went elsewhere to purchase and would never consider buying from Circuit City again. I say, "what goes around comes around". Good bye, Circuit City. LIghts out. I'm still alive, though short my $45.00. You're dead even though you stole my money.

[AnonTip]

Gee, you mean executives' "strategy" of replacing experienced, knowledgible staff with stupid high school kiddies who don't know sh*t about sh*t didn't work? What a shock! Obviously the problem was that the execs needed to give themselves bigger bonuses more often...

[c|net Reader]

A good executive is worth the money and benefits. The problem isn't executive pay or bonuses, but rewarding bad executives with such remuneration.

[The_Decider]

Never seen a "good executive".

They are all a waste of oxygen.

[stray]

That's interesting, because most recent studies I have read have NOT found that executives are worth what they are paid. The level of executive compensation has grown many times beyond the performance of their companies, and is usually established immaterial of the performance levels they have achieved. If minimum wage had kept pace with executive compensation, those same entry level employees at Circuit City would be making over $9.00 per hour today. Obviously, management didn't think that was a fair ROI, now did they?

[john55440]

I used to go to Circuit City first, and avoid Best Buy. After Circuit City's mass firing of all experienced salespeople, I quit buying there.

[techman21]

I research what I need - who needs salespeople?

[aztec92154]

@ techman21,

A: Everyone who cant or dont desire to research what they need. Which isn't "us" (CNET forum posters).

[kudos2uguys]

When Circuit City decided to fire their employees that made to much money or were getting too many benefits. I swore I would never step into a Circuit City again. But I needed a product and the only place that had it was Circuit City. So I went in and what did I find, a bunch of highschool kids that were more interested in playing video games either on the PC's in the back of the store or at the game console displays. I kid you not, they were all back there, I had to interupt their game in order to get help. Here was the worst thing, none of them knew anything about nothing and couldn't wait to get back to their video games, Wish someone would pay me to play games on my job! Anyway, I left the store without the purchase and drove thirty miles out of my way to another retailer in another county that had the same product, he got my business. Good Bye Circuit City, I hope you become the poster boys for what not to do to your employees, they are the ones that make you money, YOUR CEO'S ARE IDIOTS! And I bet THEY get paid really well for driving your store into the ground.

[c|net Reader]

This same things is playing out many places. Many stores make life miserable for loyal employees in order to replace them with lower paid kids, but the kids haven't been taught a good work ethic, consideration, or independent thought. The future looks dim in many ways.

[kennethpdavis]

Just to underline again... I liked Circuit City. I bought a big TV there and the salesman was so knowledgable (and skillful) that I bought hundreds of dollars of additional stuff (that I don't regret). The next time I went in, that salesman was gone... a victim of the great purges of experienced people.

I waited 10 minutes... standing and looking expectantly at the new salesman as he helped someone else--I don't mind waiting my turn--and when he was done, he just walked over to another section, completely ignoring me.

Now, their bankrupcy means there are two reasons that I'll never visit a Circuit City again

[wigmo]

Republicans are right. Not every company deserves a bailout, and it sounds like this is a great example of that. I never really cared for Circuit City. Their stores were ugly, selection was poor and staff unfriendly.

[rrobert5]

I've always shopped at CC before Bestbuy because I liked the layouts of the store and the merchandise seemed better to me. The firing of all the experienced people was a huge mistake, but I think they know that. Their new "The City" stores are a lot better. I was told they are tring to repair the damage with "The City" stores. 2 new The City stores opened by my house in the last year. Both have very competent "kids" working at them. I really like being greeted at the door and pointed right to the items I am looking for. I really hope Circuit City makes it. I still get lousy service at Best Buy and it is way too hard to get anyone to help you there. If CC fails BB will only get worse.

[cmstratton]

I completely agree - and think you could say this for pretty much any company that has failed or is doing poorly in this market.

Sure, market dynamics come into play, but it's the executives' responsibility to anticipate market challenges and make the right decisions to keep the company healthy and thriving. Even all of the banks and financial institutions I'd argue are not failing because of the credit crunch and housing bubble, although they're certainly factors. I'd argue they're failing because leadership made bad decisions on risky assets.

[xiaofile]

I bought my TV, Three laptops, video cards all from CC. Best buy really has lousy customer service and pricey prod. But one thing for sure, bunch of high school kids makes CC like playground

[youngson141]

well i work for THE CITY that they JUST OPENED in my area at white oak village about 2 months ago, what i have a problem with is why would they open a new store if all of this would be happen, why wouldn't they wait until they were economically stable to start putting up new stores.

[siriusproductions]

Do you think they made the decision to open that store 24 hours before it opened and "hey presto!" there it was? It was probably planned for over a year from the time they first decided to put one in that general location. Just because you came on board two months ago doesn't mean there wasn't something going on with that store long before then. You're lucky that they still opened it, because -- if I can decipher what you meant by "if all of this would be happen" -- at least you've got a job for a few more weeks before they close it, fire you and everyone else, then reopen as a bankruptcy clearance center. (I hope you have someone proofread your resume for you when you're looking for your next job.)

[B_High]

I think this is the poorest argument that I have ever seen regarding Circuit City. Mr. Don Reisinger appears to be on the short side here. Management always plays a part in any companies demise. I read the filing and Circuit City isn't pointing the finger without admitting mistakes on their part. Absolutely, the economy does play some part as do competitiors. And in fact, yes the companies management is to blame. Reality is, they do have a plan to possibly reverse the demise. In this market, how could you secure a 1.1 billion dollar line of credit without a very well supported plan of action. It's not like they went to the Federal Govt and asked for a hand out like AIG and the banks. They are the ones that were given money on a whim. Anyone with any sense knows they had to be given the money for a very good reason. They may or may not make it, but my money is on survival. Did anyone go through Emersons Chapter 11 filing? .40 cents to $4.00. It takes time, but is possible. They could go either way and in my eyes, why not gamble a few dollars. New ticker on the OTC is CCTYQ and has been up 40% today alone. $5K in at .10 would be $7K at the moment. There will be alot of short term money made here as well as potential for a long term gain or loss. I hope to see a boost through Christmas or at least alot of volatility.

[MadLyb]

If I think back to what the typical Cicuit City looked like just 4 years ago versus today, it is very obvious they don't get what customers are looking for. I will miss them, but they really lost my business about 3 years ago.

[mellowde]

It doens't matter who you hire. The attitude comes down from the top in any organization. If there were proper upper management, kids wouldn't be playing games in the back, nor would customers be turned-off in any other way. These stores are too large and there are too many of them to be managed properly. Same thing happened when the schools went from small neighborhood schools to mega-super-sized conglomerate huge district-wide schools. Poor management, turned-off students, dismay, guns, drugs, violence, etc. Same basic precept exists with CC. Keep is small and simple. Image of one-on-one customer service is priceless. Mega-stores destroy that concept. If you attempt to attract only those customers who want good price at the expense of good customer service, you also invite the type of customer who will try to get something for nothing a good portion of the time. That makes for a very uncomfortable relationship between customer and sales people. Bigger isn't better. Not by a far-cry. Don't agree, take a look at the demise of some of the other's who have tried it.

[ernestom2008]

I agree with the writer of this article, I stopped buying at CC many years ago. The last time that I was there I was looking for an HDMI cable for my dvd player. They only had some very expensive cables which I ended up buying from a website on the internet for much cheaper and probably better quality. The store is really run down and in general you cannot find anyone to help you. I asked about a cellphone and the guy really didn't know much. These guys are only order takers, they are not sales persons. It was obvious that they didn't get paid very well. And it's not only CC, I recently went shopping for soccer shorts at Academy, a major outdoor and sporing goods retailer in this area. I walked in and was overwhelmed by the size of the store. After looking for the shorts for about 10 minutes not finding any employees on the floor, I finally found two kids who worked there, they were coming out of the back room going somewhere, I stopped them and loudly said "does anyone work here?" They were not apologetic or anything, just didn't really seem to care. One of them called another employee who supposedly worked in the apparel area, she arrived, was very helpful but it was obvious that she really wasn't sure where the shorts were. I finally found what I was looking for but the experience left me with a bad taste regarding this store. Will it survive the bad economy?
I blame the store management for not hiring employees who care, paying them a decent wage and giving them the best training and motivation.

But this story is not unique to the US retailing industry, I left a company which is in an industry that in general is doing well. One of the main reasons that I left is due to the poor management that runs the company. They are bleeding their best employees and bringing new managers from the outside instead of making an effort to promote from within.

This problem with poor management in US companies is a disease all over corporate America. Until this disease is brought under control it will continue and companies will continue to fail. And yes, the bad economy is a big factor in the failure of companies at this time, but if management would prepare for these times instead of worrying about their big paychecks and bonuses and the short term profits of the company, then they would be in a better position to survive these times.

[chezbrgr]

"The last time that I was there I was looking for an HDMI cable for my dvd player. They only had some very expensive cables which I ended up buying from a website on the internet for much cheaper and probably better quality."


That speaks volumes of why there is also troubles, you probably chose not to buy the Monster cables cause they were 50 or 60 bucks and came with a lifetime guarantee from a good company, with a long track record. No you would rather have the 15 dollar one from the internet that everyone says is just as good! Think about that next time you pass your local grocy store, to go to Walmart to save 1.16 on Soda!

It's things like this that killed the buisness as well as corparate misteps.

[thealmightymonky]

"I stopped them and loudly said 'does anyone work here?' " --so you made a rude sarcastic comment in an attempt to get help and the employees were less then pleasant in response? Shocking.