Circuit City Bites the Dust — Who’s Next?

tombstone

The announcement today that Circuit City will be liquidating its 567 United States stores effective immediately and shuttering its doors for good didn’t surprise me — as I’ve talked about already, my wife works at nearly-closed-for-good KB Toys, and we’d both heard from the gentleman in charge of her company’s liquidation that Circuit City was all but D.O.A.

My own experiences with Circuit City were pretty limited — in fact, I’m not sure if I ever bought anything from them before (though, as my friends will attest, this shouldn’t mean much, as I’ve not exactly been what I’d call a technology king in my lifetime).  My purchases were mainly at Best Buy, Wal-Mart, and on-line at Amazon.

What are my thoughts (’cause that’s why you’re here, right)?  I’ve heard a number of people comment that Circuit City’s stores weren’t the nicest in appearance, and that their customer service was, in a word, lacking.  The company had fired a large number of higher-paid, experienced sales staff in March of 2007, replacing them with cheaper, but less knowledgeable workers — and the results, by all accounts, weren’t pretty.  I do know that prices at their stores seemed higher than what I’d find other places — I’d looked for a new television there shortly before Christmas at one of the stores that was already liquidating, and the price, even with the percentage off, was no lower than I could find it at the Best Buy or Wal-Mart right down the street (and there, without the ominous note “All Sales Final” hanging over any purchase).

The real culprits in Circuit City’s demise, likely, lie in two places — inept upper management (duh), and the continued failure of the banking system — recipient of the huge government bailout — to do what its sole purpose it, lending money.  The upper management of Circuit City made a series of bad decisions (the staff shakeup was the tip of the iceberg, apparently), but there might have been light at the end of the tunnel if money for lending was actually available to the businesses (and the potential purchasers of those businesses).  As pointed out here by MSN’s Anthony Mirhaydari, the number of retailers who have filed for credit protection since January of last year and attempted to restructure who’ve actually been able to do so?  Zero.

Yet financial institutions like Bank of America continue to request money from the government — and are getting it, despite the fact that they’re in many cases not using the capital to actually lend out, but to strengthen themselves and acquire the assets of similar businesses who didn’t win the government’s version of Wheel of Fortune (like recent BOA acquisition Merrill Lynch, and Company).  Does anyone else see something wrong with this?

I'd rather be screwed by Vanna

I'd rather be screwed by Vanna

Sadly, Circuit City is probably just the beginning.  We’ll be seeing a lot of other stores follow suit in the near future, I’m afraid.  What I take from this is the following:

1) We’re headed for a world where the only retailer left standing will be Wal-Mart — but due to the inevitable price increases you’ll see there when all the competition is gone (you don’t really think they’ll take a loss or a low profit on items then, like they’ve done in toys, for example, in the last several years?) and the fact that, with American spending power vanishing quicker than you can say, “My job went to China”, a large number of people still won’t be able to afford the cost of living

2)  No matter what mistakes Circuit City made or how bad their prices or customer service might have been, no one wins when a major company goes out of business

3) 90% of the people on the MSN conversation I read through who either took joy in the company’s closing — or were focused on the “Where’s my cheap TV at?” or “Can I stop paying on my Circuit City credit card now?” — might stop to think that it might be their job that’s gone tomorrow, and said event might not be as much of a cause for celebration as they’re making it out to be.

So who’s next?  Instead of a typical dead pool, maybe the next step is to be a part of a industry dead pool, where you can predict the next retailer whose number is up.  The way this year is headed already, though, picking the future bankrupt businesses might be as easy as shooting fish in a barrel.

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