Circuit City is the KMart of consumer electronics and Best Buy is the WalMart of consumer electronics.
And that is one of the issues - too many stores. Each of those stores has pretty high fixed costs (real estate, heat, lights, minimum staffing). Most of the things people buy at Best Buy or Circuit are low margin. So to make any money, you need to spread the little margin you get over keeping fixed costs as low as you can.
If you run a Circuit and it costs say $2,000 a day just to keep the lights on and it staffed, and your margin is 10% on most of the things you sell (which isn’t unusual for these stores - and its OFTEN less), you need $20,000 in sales at that store every day just to stay in business.
We went in there a couple months ago for car speakers and our dude was just a brain-dead, uninterested, knuckle-dragging moron. We zipped across the street and worked with a great guy over at Best Buy. They were just horrible.
Incredible – Can anyone answer why exactly Circuit City had such bad lighting? I’m not an interior decorator by any means, but damn, the lighting in CC was so dark compared to Best Buy. Were they trying to save money on electric bills? It gave an unwelcome, closed feeling.
Also, why were the employees so ignorant and arrogant? I noticed that they would sort of cop an attitude like a car salesman, trying to intimidate you on how great whatever item you wanted was. Was it some bizarre coincidence that all the jerks applied to work at CC, or did the management actually promote that? And why?
My guess is commissions – I know that Best Buy doesn’t pay its people commissions. Maybe CC was hurt by the commission system? In my experience with those “apply for a credit now” people at the airport, the commission system seems to encourage stupid workesr to be obnoxious to bystanders. But if it was money they wanted, why be rude?
IME Best Buy is slightly more oriented towards electronics than it is to white goods–refrigerators, washers, and the like–than CC is. For whatever reason, that may have contributed to a better performance. In addition, if the situation in Los Angeles is any example, Best Buy positioned itself better geographically by being within easy reach of the more affluent neighborhoods, yet still not renting the most expensive retail space around. For example, their West L.A. store is easily reachable from Brentwood, Bel Air, and all the upscale parts of Santa Monica, but the store itself is located in a much less ostentatious part of West L.A. CC, by contrast, rented a large ground floor space in Westwood Village.
I found their customer service to be poor. I now always go to a competitor.
It just seems bizarre to me that I work in a business centre of the economic centre of the nation, and I live closer even than the INNER suburbs to that same business centre, but there is no place to buy small electronics within reasonable walking distance of either. I now have no option other than to (a) spend an hour getting from my office to Future Shop/Best Buy and back (it’s not even on the way home, it’s in the clear other direction), or (b) ordering online, or (c) convincing someone to drive me out for a special trip. Just to buy a flash drive. What is it about these particular products that makes it so?
I’ve accepted that I will never buy books in a store again (even tho I am surrounded by bookstores at my workplace) because those store’s websites have made it economically irrational for me to do so. But at least I have the OPTION of walking into a store and touching the merchandise if I want to.
I remain disgruntled. I guess I’m turning into a crotchety old lady a little early. I should go get a cat or two.
Not only did CC fire all of its experienced, higher-paid workers, but it had the balls to offer them the luxury of re-applying for their old jobs at minimum wage. Dick company, and good riddance to them.
Someone on Slashdot made the comment that in the event of Zombie apocalypse, perhaps we should go to Radio Shack, since it can apparently survive anything.
The lighting was prevalent in older stores and they never got around to remodeling these stores. They were smaller, had low ceilings, were dark.
Their newer stores are much nicer, well lit, high ceilings.
And yes, commisions were the reason for the arrogance. BestBuy pre 19(89?) was also a commisioned environment and there were plenty of arrogant asses there.
CCs have recently went to the non-commisioned model but it all seems to be “too little too late”.
if that was true then even I would buy CC stock. Make that $3.4 billion in assets and $2.32 billion in liabilities ( http://www.msnbc.msn.com/id/27641634/ ), as of Aug. 31. Considering their assets may range from old stock and store properties and good will (hah!), then it may be totally cash flow insolvent.
My experience is that Best Buy was always a little better. Under the best of circumstances, I might find the same or a very comparable product (on-line) from the two at a very similar price. The nod went to Best Buy because I could pay it off over six months with no interest.
The CC here went from a standalone to in-the-mall and it improved. E.g. I was able to “order” my camera on line and pick it up in 24 minutes or something. I had a laundry list—camera, extra card, tripod, etc. I walked in and was out in ten minutes without much fuss at all…everything was in stock, at the price cited on-line, and so on.
One retailer that amazes me is Borders. They’re always a couple dollars higher for a CD or book, it seems. With amazon.com et al, I wouldn’t think they had a prayer, but they seem to do fine. Of course, they may position themselves in nicer areas where people don’t sweat a couple bucks here and there.
Well, this is why I stopped going: when I read about that in the newspaper, I made the decision never to darken their door again. Before that, I always found them adequate.
Eh, BestBuy did the same thing in 89’.
Told all the commisioned sales people to take an hourly wage (well below what they were used to earning) or hit the road.
As it happens, Borders is another retailer that’s on the edge.
This is what I found at Circuit City. They were just a pain in the ass to buy from. I bought a USB hub from them once. It took forever for the sales woman to ring up the purchase. It seemed to involve several different devices and consulting with other people.
How many employees did that affect? I’m sure it’s just regional bias, but I had never even heard of BB until the mid-90s. When CC did it, they were and had been for decades a nationwide chain.
According to these numbers, they had only $2.168 billion in current assets – cash or things that can be turned into cash relatively quickly. And, as of August, their net cash outflow from operations was $70 million per quarter.
I think bookstores lend themselves to browsing more, just by their nature. I’ll stop in there when I’m at the mall, and if I see something I like, I’ll probably get it. Whereas chances are you go to Best Buy with something in mind.
Same here!
That being said, consumer electronics is a tough business. Things change so quickly that you can easily get stuck with obsolete inventory. You can be selling HD video players one day and the next day it’s as if they all turned radioactive. You’ve got a warehouse full of then and what do you do? I don’t really know anything about the CC balance sheet but the first thing I would want to find out is how much are their assets are actually obsolete inventory.
There’s a long history of electronics retailers expanding rapidly and then going belly up. Crazy Eddie’s, Comp USA and Highland Appliance immediately come to mind.
North Carolina was one of the last places BBY expanded into being it was right in corporate CCs back yard (Virginia).
BBY started in the midwest (Minneapolis) and at the time it cut out commisions (1990) they were at 50 stores plus. It affected all sales people.