FAQ: What Circuit City's bankruptcy means for consumers
CNET News Poll
Just a week after saying it was closing some stores to get its finances in order, Circuit City on Monday filed for bankruptcy protection. It will help keep creditors like Sony, Microsoft, Toshiba, and many others who have yet to receive payment for their products, at bay while Circuit City tries to get back on track. The company has also secured a $1.1 billion debtors' line of credit to keep stores open and pay its employees.
The timing, for a retailer, couldn't be worse. It's not exactly assuring that right as we're about to start holiday shopping one of the main places for consumer electronics gifts seems unstable. So what does this mean for consumers? Here are some important questions and answers about what Circuit City's current situation means for you.
Q: Does this mean less choice for places to shop for the holidays?
A: Actually, no. Circuit City will be open for business as usual. The company did announce last week that it would be closing 155 stores, which will go on as planned, but 566 of its stores will remain open. Whether they will be fully stocked is another question, but Circuit City says that its new line of credit will help keep its shelves full.
Q: Will there be any staff around to answer my questions?
A: Circuit City says it's reduced its support staff in district and regional roles, in addition to the positions eliminated at its stores currently being liquidated. Overall, there will be 20 percent fewer employees company-wide, but the retailer insists its stores will be well-staffed during the holidays.
Q: Great, will everything be on sale?
A: Not necessarily. One of the biggest myths about store liquidations and or retailers in financial trouble is the assumption that there will be huge discounts as a result. That's actually false most of the time. When companies are in debt they need to make as much money as they can in as little time as possible. Though there will be some price reductions, it doesn't mean drastic ones. As reports from last week indicated, the stores that are currently being closed were offering only minimal discounts.
(Credit:
Circuit City)
Q: What does this mean for Circuit City's credit cards and warranties?
A: Circuit City's co-branded Chase credit card and Circuit City Advantage Protection Plans are each handled by third parties and will not change because of the bankruptcy filing.
Q: If I buy a gift card for someone this holiday, will the company still redeem it? And will returns be honored?
A: We don't know yet. Circuit City says it has asked the bankruptcy court for permission to honor returns, exchanges, and gift cards, but it does not have a definitive answer yet. Circuit City says that it does expect its request to be granted, but don't count on it until we know for sure.
Q: What about Firedog?
A: Circuit City's tech support service brand will continue as normal, with no changes, according to the company.
Q: Will Circuit City be around after the holidays? Or is this just a temporary fix?
A: It's still uncertain what Circuit City could look like six months from now. However, the idea behind filing for bankruptcy and the billion-dollar line of credit is to give the company more time to sort out its finances. Its biggest problem was credit--now it has that.
In the meantime, as it proceeds with the liquidation of the 155 stores, Circuit City will get some cash for products in those stores, and eventually be freed up from the associated property leases. The retailer's balance sheet will also benefit from the payroll cut resulting from the layoffs at headquarters and in the liquidated stores. Circuit City also plans to renegotiate some of the leases it has on the stores it plans to keep open.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica. 
I knew gift card was a scam.
Gift Cards are just fine and no different than debit cards
or anything else. Courts who do not allow, enforce and
even demand someone make good on balances due are
the giant scammers!
What, next baby rattles were a medical nightmare and
you just knew that too?
There are 155 stores total that are closing. <A HREF="http://drensrandomthoughts.blogspot.com/2008/11/circuit-city-closing-155-stores.html">There is a list of them here.</A> 20% of the over all staff. That?s a lot of people that are going to be out of work for the holidays
I hope CC pulls through.
Happy Trails CC.. I'll continue to shop butterflyphoto, tigerdirect, crutchfield, J&R, newegg, and amazon for the best deals.
Besy Buy, on the other hand, is irritating. I was once told that if I did not buy the extended warranty service then my warranty would be void on my digital camera. At that moment, I just wish I had more time to go shop elsewhere before my flight overseas. And I once saw a lady walk through the exit, setting off the alarm, and the guy at the door (you know who I'm talking about) immediately jumped over and grabbed the bag out of her hand before she knew what hit her. She had an expression on her face as if her purse had just been snatched. I have seen things like this several times in Best Buy, but even I was taken aback with the "purse snatching" incident. I could not believe my eyes.
While I didn't like how some of it was presented in store (by the book, the customer needs come first) mainly because they interpreted the book in their own greedy way, some of it actually comes in handy. The PSPs for the most part give you a battery replacement, which pretty much covers the cost of the PSP. Wear and tear can count too, and if you nothing happens, you can just ask for a new cosmetic exterior or just complain about a moving part. If you get the accidental (which is just a little more expensive than a battery replacement), then you can literally get a new camera in two or four years by simply pouring water (not submerging) on it or dropping it a few times or something. Some people naturally find it valuable while others don't. I say its a case by case kind of thing, depending on the person's lifestyle and habits, etc.
As for the many bad experiences there, they're also really strict about shrink. While they're not supposed to be that hasty with the inspection (due to legal issues--we can't even touch the customer, even if they're running from us), they're just trying to do their job. If you think it was a little too much, just fill out their CSI survey (found at the bottom of the receipt), and fill it out with AS LITTLE BIAS as possible (so they actually take you seriously) and be on your way. The survey goes a long way because it's one of the three things that influences the managers' (anywhere between 4-8 of them, depending on store size) pay and time with the company. The key is to be as honest as you can be in the comment so they don't just blow it off as a "******** customer" (as my GM used to refer to them as).
All in all, they (Best Buy) have issues, but I would still trust some of my business there for item exclusivity (like Magnolia sound stuff) and low-margin items (stuff that can't be bought cheaper elsewhere).
I'm not surprised in the least that nobody else wants to shop there either. Apparently from the posts above there are a few stores with good managers...maybe they can get jobs at Best Buy when their CC closes.
- by jwissick November 10, 2008 6:15 PM PST
- This is no loss and no surprise. CC has had the most lazy workers and management for a long time. The stores are dark and dingy. The DVDs and CDs are not in anything close to alphabetical order or category order. The selection sucks. There is unlabeled product everywhere. There are sections for where there is no relevant product. The management drove this store into the ground.
- Reply to this comment
-
-
- by hotmail123 November 11, 2008 4:27 AM PST
- Staffs are only workers, they just follow orders from the management. It is the management who drove the store into the ground & they did a very bad job. Just a few months ago, Block Blusters had offered $5 a share to buy Circuit City....but the management did not cooperate & rather file for bankrupcy. The shareholders should kick the CEO out.
-
-
Showing 1 of 2 pages (51 Comments)