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Where Does Circuit City Go From Here?
Their stock price has been halved in the past month and is down 80 percent in the last year overall. Between disappointing financial results and poor decision-making (such as their decision last spring to axe 3400 of their highest paid staff), they've been excoriated by both the business media and the blogosphere.
We're just over a week into the New Year, and CEO Paul Schoonover is already the front-runner in financial journalist Herb Greenberg's annual contest of America's Worst CEO (although to be fair, he was a runner up for the title last year).
The bad news continued Monday, when the company announced their December sales results.
Besides an 8.9 percent decrease in net sales ($1.92 billion, vs. $2.10 billion in December 2006), other highlights included across the board decreases in video, audio, gaming and computers.
So, in light of all this doom and gloom, what might 2008 hold for Circuit City?
Circuit City may not look so good now, but I don't think that the fat lady is ready to sing yet. Opportunities for growth and improvement lie along the current plans to improve store locations, increase attachment sales and their investment in PC support services and home entertainment installations.
Circuit City's process of relocating older and weaker stores to better locations has been ongoing. Unfortunately for investors, this self-improvement project is a most time consuming -- and expensive -- undertaking.
Additionally, it is the one that will take the greatest amount of time to bear fruit.
Last April, I was sharply critical when Circuit City management announced that they were going to embark upon massive training endeavour to grow attachment and warranty selling. I was critical not because it was a bad idea, but because management acted as if this was a bolt out of the blue, when in reality, their salespeople should have been doing it all along.
My sarcasm notwithstanding, the basics are still fundamental, and at least now, they realize that if they're going to make money at retail, they need to not only sell some more TVs, but they need to get some cables, a mounting bracket, a warranty, and maybe even a stereo onto the invoice while they're at it.
While the 15 percent growth seen in their service areas can be attributed to easy early growth in a new division, the fact remains that if a labor-based business model has worked for smaller CE dealers, a national chain can do the same on a larger scale.
Those of us at the boutique custom level all like to make fun of Best Buy's Geek Squad, but on a bigger level, they seem to be doing something right.
While I don't think 2008 is going to be a banner year for Circuit City, I don't think that it will be truly dismal either. I expect that the media bloodbath will continue (and I reserve the right to continue taking cheap shots at them on my blog).
While I think the slow, painful process of change has been slower and more painful than it needed to be, I think they’ll turn out to be stronger by next Christmas.
Lee Distad is a freelance CEDIA Certified Professional Designer who offers design and process consultation to firms in the Custom Installation industry, as well as copy writing and other professional writing services. Lee’s business and industry blog can be read at http://www.leedistad.com
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6 Comments (displayed in order by date/time)
I think that’s what a manual is for, not an ad.
“Some retailer, somewhere, someday, is going to want to make money, and he is going to actually put 200 words of explanation in his ads telling people what this stuff is and how it works”
In this country? Most people are too lazy to read 200 words in order to understand something.
I kind of like Circuit City. They still work on commission (or at least, they did the last time I was shopping for a tv) so the salespeople are actually motivated to help you out. At Best Buy you can spend half an hour trying to get a salesperson to help you empty your wallet.
Isn’t Circuit City’s Firedog pretty much the equivalent of Geek Squad? Me, I’d rather call in the Nerd Herd….
I once interviewed for a position with CC awhile back for what seemed like a nice regional director position. After nearly 6 hours of phone interviews, I finally got the call to come to Richmond. After an entire day of interviews, personality profiling and testing, I was sent home, only to find that all contact was terminated. When I finally contacted my HR rep, he told me that they chose somebody else, and that I lacked the necessary experience to excel at this job.
“what was it about the the last 23 years in the CE and CI industry you don’t understand?” I asked.
“Well, We’ll keep your resume on file” I was assured.
“Don’t #$%$$ing bother, and NEVER call me again,” and slammed down the phone Now I’m never one to burn bridges, but glad I did on this one. What a bunch of clowns.
Whew, Steve Harbor, obviously has not been in a CC in quite some time. Sorry to bust your bubble Steve but CC associates HAVE NOT been on commission for several years. You say you “kind of like” CC? You think the employees are motivated to help you out? Steve, your telling on yourself! I’ll bet you haven’t been in one of their stores for several years or would have noticed a tremendous change in customer service and employee attitude. Visit a CC now and then visit a Best Buy and come back to post your findings.
I recently had FIREDOG come to my home to have a premium install, they were on time, clean and did a great job, the best part was how well the installer explained how to use the system properly. They said they were part of the new internal team based in Westbury, my wife laughed when she saw the installers wearing shoe covers and white gloves but later appreciated it when she didnt have to worry about cleaning up after them, they actually vaccumed and left the rug cleaner than when the started. I highly reccomend their service.
Let’s see, duh, run an expensive Sunday mag in the newspaper every week in which you show routers of all sorts and external hard drives and NEVER+EVER+NEVER say what they do, how they work, how a mortal lacking an EE degree would set them up and actually (gasp) USE them in his home. Never! Just show little pictures of these little devices with two antennas and show a name and maybe so b.s. about Gigaherz or frequencies. If that is all you show, you can make people feel stupid. You may even make them feel like morons. They may have tens of thousands of dollars of available credit on their credit cards, but its LOADS more fun to make them feel stupid and then go bankrupt than to actually tell people what the products are and what they do. Oh, and don’t worry that they will get on the internet and look them up and find out what they do. The manufacturers are in with Circuit City on this. They won’t tell anybody what they do either!!! So this stuff is sold to a small cult of people with rings in their noses, I guess. Well, to get even, I am following the demise of Circuit City with great anticipation. Some retailer, somewhere, someday, is going to want to make money, and he is going to actually put 200 words of explanation in his ads telling people what this stuff is and how it works and how a mortal would set it up without paying a “custom installer” $250 per hour to try to figure it out and set it up, whether he succeeds or not! All you CC shareholders should descend on the SH’s meetings and give management bloody hell on this. It’s your company and it’s your investment that is being driven into the ground!