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Circuit City Closes Its Doors For Good
bsharma is amongst the hordes of people wanting us to share the news that long beleaguered retailer Circuit City has finally decided to close for good, asking for court approval to close the remaining 567 US stores. "Whalin said management mistakes over the past few years combined with the recession brought down Circuit City. 'This company made massive mistakes,' he said, citing a decision to get rid of sales people and other mismanagement. What's more, given the credit market freeze, Whalin added that no manufacturer wants to sell to any retailer who doesn't have money to pay for the merchandise. At the same time, Whalin said there's still a very slim chance that one or more firms that have expressed an interest in buying Circuit City could still buy it out of bankruptcy over the next few days."
Of course, the moral of your story is that the little mom 'n pop store bent over backwards to give you high quality service; but only ended up getting best buy prices... That isn't really an inspiring tale of the victory of the little guy.
People aren't afraid to spend too much money if they get good service. And that was precisely what Circuit City did. They fired all of their best, most expert sales and service staff because they cost more. They replaced these people with kids off the street and they got what they paid for.
It was bad customer experience that killed Circuit City. The bean counters thought they could improve their bottom line by lowering payroll costs but they neglected to consider that it would damage the store's reputation and drive customers away. We see this time and time again. Every time you see IT salaries fall and people start leaving the field, what is left? Do they really think they can fire skill and experience and replace it with inexperience and STILL maintain productivity, efficiency and quality of service?
At the next CEO/CFO conference, I hope this is topic for discussion -- they are destroying their businesses with short-term greed. And every time I see it happen, it is tragic... and they never learn from it.
The small guys got the business. In this economy that is huge. Survival through blood, sweat, and tears is rarely "an inspiring tale", except when it is told by the survivors to their thriving descendants.