On November 10th, 2008, Circuit City went out of business, and there is no mystery why. According to Time Magazine, "you could blame it on the bad economy or decreased consumer spending — which played no small role" but the main reason why they went bankrupt was because of "good old-fashioned bad management." Another reason why they went out of business was because of their main competition, Best Buy. From my personal experience, it does not surprise me that Best Buy is still in business and Circuit City went out of business, because I like Best Buy better and I believe they have better customer service as well as better inventory.
According to a blog, these are the top 10 reasons why Circuit City would have, and did, go out of business:
"10. If it ain’t broke, fix it anyway. During the ’90s, Circuit City was doing great. The problem was, competition was coming and it was coming hard and nobody took Best Buy seriously. If you don’t crush the competition, don’t be surprised when they crush you.
9. In a competitive environment, don’t take your eye off the ball. DIVX and CarMax were major distractions and Circuit City suffered greatly as a result.
8. In 2003, Circuit City fired thousands of employees and ended commissions for sales people in favor of an hourly structure. In 2007, Circuit City fired 3,400 of those hourly workers for cheaper replacements. When you fire well-paid veteran employees to make room for less-experienced, lower paid workers, your customers will notice. And they won’t like it.
7. Location, location, location! B locations equal B customers, B sales, B results.
6. Don’t notice too late that people want to buy movies, games and music when buying the hardware to play them. Those low margin items helped create brand loyalty for Best Buy.
5. Old, outdated stores need to be remodeled or closed and new, bigger ones need to be opened in competitive markets.
4. Selection and availability of hot products is crucial. If you don’t have what I need, Best Buy, Target or Walmart will. And next time, I will probably go there first.
3. Give customers a “real” rewards program. Not just a come-on for a branded credit card.
2. The state of “customer service” in retail America is abysmal. You can tell very quickly when you walk into a store that the employees couldn’t care less. Circuit City’s reputation for customer service was far less than stellar.
1. Filing for bankruptcy 16 days before Black Friday is an extraordinary event that no consumer can ignore. With consumer confidence non-existent and retailers fighting for every sale, you may as well just shut the chain down now."
http://www.time.com/time/business/article/0,8599,1858079,00.html
http://danieldurazo.com/2008/11/16/top-ten-reasons-circuit-city-will-go-out-of-business/