I would love, love, love if this thing could be traced back to the firing of the experienced employees, who would be presumed to give a more satisfying, helpful shopping experience and thus would be a lesson to companies who want to cut back on customer service.

But then you look at Tweeter, who, except for a few examples, had good, knowledgeable employees and is going through similar problems. Damn.

I heard it's more fun if you raise your hands in the air...

Maybe Circuit City should fire all of their executives and hire lower-paid replacements.

Can stockholders sue the CEO for malpractice?

I hope everyone learns from this: you can only cut your services so far until the customers go somewhere else. I'm looking at you, airlines.

@Uh oh... Cleveland:

Yep, that's what happened at HiFiBuys, too.

I'm sure running off everybody with a brain cell didn't help things any, but let's face it, Circuit City was a crappy store for years. The only thing they were good for was price-matching, and the firings just made a bad situation worse.

@Bahnburner: But I don't wish to imply that I just don't care.

@Uh oh... Cleveland:

I agree, if you look back 3 years instead of just 2 years, you'd see that CC's stock price began it's death spiral long before the mass firing.

You could go back to March 2002 when they did their first employee-screw. That's when they took all commissioned employees and made them hourly, at about the rate of what the average salesperson was making. This caused the good salespeople, who were going to make less, to quit, leaving them with the average and less than average.

I am sure people would like to blame their staffing change. Perhaps that how revisionist history may play out.

I see the staffing change as an attempt (albeit an ultimately unsuccessful one) to forestall this very happenstance.

Brick and Mortar stores simply cannot compete with the "no sales tax" and "free shipping" internet age. Brick and Mortar can only cater to those who (1) need an immediate gratification or (2) do not have the means to purchase over the internet. #1 is a very delicate balance as to price sensitivity, and can't sustain a huge chain. #2 tends to be of a certain income range and DEFINITELY cannot sustain a huge chain.

The internet got them ... but blame the re-staffing if you want.

@Uh oh... Cleveland: Because of the size and popularity of Circuit City over the years, this will be a great lesson for business schools, if it isn't in some courses already.

Brilliant timeline. I love it.

Btw, nice tag for the story. Circuit city death watch? Also brilliant.

@Swifty: I'm pretty sure I could step in at half the price of one of the execs.

@Uh oh... Cleveland:

Keep in mind that Tweeter sold high-end stuff, so there market was a bit different. Tweeter failed because the average person can't tell the difference between a $8,000 TV and a $1,500 TV. Combine that with a recession and Tweeter is f#$%ed.

@Swifty: I'll be happy to take over as CEO. I'll do it for half of what the guy who runs it now makes. How long before I get my golden parachute?

I think you should add when they decided to stop sellin appliances and when they decided to law off commission workers and switched everybody to hourly.. That was their down fall

@jdmba: But if it's impossible to compete with online shopping, why is Best Buy doing OK?

It used to be the difference between the two stores was Best Buy had (mosly) clueless employees who weren't paid on commission and made fast-food wages, while Circuit City had more knowledgeable employees who worked on commission and made more, but also applied more pressure. And if you walked in and looked like you don't have much money to spend, good luck getting any help. CC got rid of that distinction, but then away went the only advantage they had.

When I worked at BB in 1994-95, I won virtually any sales contest the store did. I wasn't a good salesman, but I knew my product inside and out. People sensed that, and they'd buy from me, solely because I was knowledgeable and honest. But as soon as I found a job that paid me $8/hour, I walked away and never looked back.

@Murph1908: How about... they get rid of "salesmen" and hire knowledgeable people who help you buy what you want and need?

I would look at the Blockbuster withdraws and the $164million loss dates. Something didn't come out right. 6/20 before 6/01.

@Uh oh... Cleveland: I don't think you can really pin it on a single thing, except for different examples of poor management, or even draw that single parallel to a different company. Circuit City was built as an electronics and appliance store. They seemed to rest on their laurels for way too long. They didn't expand enough, they didn't upgrade their store fronts, they didn't innovate in any way. They became like RadioShack only bigger when Best Buy came into town. If you want to compete, you have to compete.
From the looks of the graph/timeline, the stock was slipping before they released the quality front-line staff. So it wasn't the beginning of the decline, but definitely the beginning of the end. Rather than looking to raise the top line, they looked to lower the bottom line, and that bottom line can only go so far. One thing I hear time and time again, it's far less costly to sell to an existing customer than to put your efforts to bringing in a new one. Furthermore, happy customers multiply due to word of mouth. Even further, angry customers will drive business away faster than a happy customer will bring in new customers, and the duration of an angry customer is decades long.

Unfortunately, during these greedy times, the people that were making the decisions were only looking at THEIR SHORT TERM top lines, rather than their company's long term top lines.

@Cameraman: Going elsewhere implies there is alternative competitition. Considering all airlines (with the exception of SW) are following in suit and I'm not about to hop on a train to Europe... we are screwed.

@jdmba: Why did the internet get them? Sure, buying stuff over the internet is a no brainer when compared to paying for lazy employees, rent on huge stores, and keeping salesmen to make you buy stuff you don't need.
It is possible to compete with the internet.

Pull the graph out to the left more. You make it seem like the decline began with the firing.

You are begging the question.

@Dave-Farquhar: I was going to mention Best Buy as well. They will be around for a while, although I know most here hate them, I buy from them often. Sometimes shipping an item can cost more the frieght stores build in to the price, and even if you get free shipping, its not free.

You can still get good deals at "brick and mortor" stores, Best Buy is good for music and movies on sale, Micro Center is good for computer stuff, usually beating out even ebay.

@jdmba: Immediate gratification - it's the only reason I enter into these stores because I know that I will ALWAYS get a better deal on the internet.

However, if there is something that needs servicing, I buy it at a brick and morter because there is a PLACE I can go back to, holding people accountable.

If I can't trust the shitty staff back at the brick and mortar, I don't buy there in the first place.

I usually buy shit like this at Sears. Their staff sucks eggs and their management functions like it's a McDonalds, but there is a corporate reputation established on backing up the shit that's sold.

Sure, there are problems with Sears, but this is my decision making and rationale.

@jdmba: I, for one, prefer to shop in a "brick and mortar" store, where I can ask questions, see the item, and take it back if it's broken. Sadly, all these areas (Customer Service) are where Circuit City began to fail.

I think the downfall was directly linked to the employee fireing and here's why. CC had a great deal of high end merchandise. More so than your average Best Buy or Fry's. With that business model you pretty much HAD to have knowledgeable staff in order to sell the highend stuff. Not only could such and experienced staff sell the highend stuff, they knew how to up sell the high margin accessories. That and extended warenties were there whole business plan. When the went to cheap labor, they thought they could do business as usual but with no incentive to sell, why would they. As a result they took a nose dive. CC living legacy will go on in economics and buisness text books on what not to do.

@Swifty: I'm sure there's droves of business/management majors out there who are worth five times what each and every CC executive is payed, and could have turned the company around easily.

@jdmba:
The internet may have helped, but remember, CC also sold product online, with a better portal I might add. It had a customer rating system that was pretty cool. I use to buy from them. I agree to a point. I think increase competition by internet stores helped, but business damning business practices ultimately lead to there downfall.

Looks like the executive retention bonus plan was money well spent!

@OggJoshua: You are only allowed that course of action provided you wave your hands.

@jdmba: I have mixed feelings about this argument. I have found multiple items over the past year at Best Buy that were cheaper than any Internet offerings. The trick is to order from the website; even with in-store pickup the Web-only prices are still valid. This serves an added bonus of avoiding the sales drones. With in-store pickup, you also avoid shipping, which is a bane on even some smaller items.

My local BB is fairly close. It requires less than half a gallon of gas for a round trip, making the cost less than shipping, but this isn't applicable for all parties.

In regards to the layoffs, they likely found what WalMart has as well - there was little to no correlation between seniority (which translated into pay) and selling. Dumping the commissioned structure was probably a mistake in hindsight, but at the time, Best Buy was making a big marketing push around the fact that they _didn't_ have commissioned salespeople (i.e. less pressure).

I was looking at this graph last week. It's pretty scary how they have fallen so fast.

Wonder if they will shift their plans from closing 155 stores to closing more.

Wow, check this poor sucker out. I hear CC gift cards no longer have value.

[cgi.ebay.com]

@OULAXER11: That's what they tried to do when they got rid of commissioned salesfolk. See how that turned out?

There's nothing wrong with people making a commission. It's a great way to motivate people. Hourly folks are disinterested because, well, they're not interested in helping you because they get paid whether they do or not.

@snowburnt: It looked like the stock had stabilized at that point, and you can see the slight profit spike they got from the lower bottom line...and then the bottom falls out.

That's a convenient place to start, but I think their problems began before all that. In the suburbs of Chicago, I've seen two Circuit City stores fail even before the current Niles Store closing.

For better or worse, this has been a long time coming.

Circuit City has been searching for an identity for years, so no surprise here. Best Buy totally took their market share as their executives shot off short term fixes (i.e. firing experienced staff, new marketing programs) instead of figuring out their niche in the marketplace.

@Uh oh... Cleveland: Best Buy management stopped considering circuit city a competitor back during the holiday season of 2005. I worked briefly in the geek squad there, and weekend meetings always had a brief interlude on how circuit city had shot themself in the foot that week. Best Buy is no saint, all i'm saying is that inside the big box industry this is no surprise at all - they have seen it going this way for 3 years now.

jdmba Says:
"Brick and Mortar stores simply cannot compete with the "no sales tax" and "free shipping" internet age."

Hmm... I guess that's why Best Buy is doing so poorly too. /Sarcasm

@jdmba: Having worked as a 'commission' salesperson in the 90's, I think there are arguments to be made all around. The second 'experienced' staffer cut was a mistake but not the death knell. Back in the 90's CC touted how it didn't own any property, how it leased all of its stores and how this was a much smarter business decision than what was happening with BestBuy. But my understanding is that the leases were killing them in the end. They were trying to cut everywhere they could - not necessarily cutting experience but certainly costs with the 'experienced staff' cuts. They couldn't cut those leases, at least not until now. Although I think commissioned sales really was the way to go, the market for that kind of assistance is just gone. Now, it's so easy to learn all that a commissioned salesperson knows and then you can get it for a cheaper price. It was only a matter of time before salespeople were going to become cashiers. I think that the leasing of properties combined with Wal-Marts 800-pound gorilla entry into LCD sales drove CC into the dirt. When the Mart could tell manufacturers 'we want this' and they had to listen, when they could cut margins below cost for all the other big boxers, CC was not ready for such a challenge. With the leases and the high executive compensation, they were a sitting duck. Bye-bye CC. It's the end of an era.

I'm sorry to say that the CC in NYC's Union Square has sucked since the time of the old employees.

It's the only store in the city where NONE of the media titles have ever been alphabetized so someone could actually find a title of interest.

Poor prices. Poor selection. Poor service.

Good riddance.

Another bit I'd like to see in this timeline - where those bitches at Circuit City specifically targeted Egghead Software and drove them out of business.

Yes, I held that grudge a long time. Now die, die, die.

Yeah, it pretty much was a downhill bad management process. First, let us get rid of commission based sales so now employees have no motive to sell more. Then, lets get rid of the higher paid knowledgeable employees to replace them with lower paid employees who don't know anything about what they are selling.

Couple that with messy stores, uncompetitive prices, and the almost inability to get service when you need it, and you got your losses.

@jdmba: The internet got them in that it was so much easier to share the horror stories.

While internet retailers have a big cost/overhead advantage, the ability to see/touch/feel a product in person and to have someone help out with the said product, still has its advantages, hence why even those with the ability to order through the internet still opts for a B&M store for their purchase instead.

Eliminate the help, though, and the only advantage is is the ability to see/touch/feel the product. Hey, if you can't help me spend money here, I'll just go elsewhere ... and that is why CC is dead.

@albear: according to reports, gift cards will still be accepted. At least for now...

@AnonymousFinger: He's got a point though. Sooooooo much less overhead. They've got higher margins at lower prices than brick and mortar stores. They can cut prices to try and compete, but they're only hurting themselves by eroding profit margins.

Karma for the original DIVX (The pay-per-view DVD format they created back in 1997-99). Before that I considered them "Circus City", but after trying to kill DVD, they became "Circus Sh---y."

Good riddance.

CC definitely has been hurting, but it's now more of a tech. monopoly in the MA area for Best Buy. CompUSA went under and now CC, which only leaves tech gear buying to Best Buy and the only Microcenter in the state.

CC may not have been all that great, but geez, BB is worst than that!!!