Circuit City Plans In-Store Return

[Alpha8472]

Circuit City plans in-store return this year with a more expansive rollout in 2024.

https://chainstoreage.com/news-briefs?c ... %3A14%3A56

[Retailuser]

To fail again? Especially with the current retail situation.

[jamcool]

Where will they put them into? Macy’s? JCP?

[ClownLoach]

Where will they put them into? Macy’s? JCP?

How did you guess?

I heard that there are small cell phone accessory areas that are being added to JCPenney stores that are branded as "Powered by Circuit City."

I doubt that they will get any further than that. The electronics industry is a perpetual fight as margins deflate each year, prices decrease, and thus comp sales are dependent entirely on increased transactions above and beyond average ticket decrease. Put simply, it's like pushing a boulder up the side of a mountain in the middle of a blizzard. This guy has been trying to resurrect this place for years.

Having said that, they did not fail the first time for any reasons within their control. The company was nearly debt free, but they got killed by their own Wall Street force fed stock buybacks combined with the banking system credit collapse of 2008. The banks were looking for any excuse to cut off funding to everyone and when they filed a loss entirely based on stock price declines (and a touch of shrink) at the worst possible time they were immediately cut off which created a literal run on the bank by their vendors who suddenly demanded cash up front and forced a Chapter 11. Low margin retailers like electronics stores have to use factoring (financing) for all of their inventory; there is no other way to build enough cash on hand when you have items like laptop computers that sell with anywhere from a -3% to 2% margin (you read that correctly). All of the money is made in attachments (accessories, warranties, cables, services, software, etc).
Because all the credit was frozen everywhere they couldn't get out of bankruptcy. The liquidation began on a Friday and by Monday all the creditors were paid off. It was the most profitable liquidation in retail history. The great irony is that Best Buy aggressively recruited their leadership and you can see how they have changed their stores into Circuit City 2.0 over the years. Their newest prototype is literally converting a Best Buy standard format into a Circuit City style showroom/warehouse model with registers throughout the store instead of checklanes up front. All they need to do now is put a red tower on the front with the Best Buy logo on it.

[mbz321]

They can cram it in with a Toys R Us inside those new Ames stores that are coming back any day now

[storewanderer]

This brand has been gone too long.

No use doing this.

[pseudo3d]

Having said that, they did not fail the first time for any reasons within their control. The company was nearly debt free, but they got killed by their own Wall Street force fed stock buybacks combined with the banking system credit collapse of 2008. The banks were looking for any excuse to cut off funding to everyone and when they filed a loss entirely based on stock price declines (and a touch of shrink) at the worst possible time they were immediately cut off which created a literal run on the bank by their vendors who suddenly demanded cash up front and forced a Chapter 11. Low margin retailers like electronics stores have to use factoring (financing) for all of their inventory; there is no other way to build enough cash on hand when you have items like laptop computers that sell with anywhere from a -3% to 2% margin (you read that correctly). All of the money is made in attachments (accessories, warranties, cables, services, software, etc).
Because all the credit was frozen everywhere they couldn't get out of bankruptcy. The liquidation began on a Friday and by Monday all the creditors were paid off. It was the most profitable liquidation in retail history. The great irony is that Best Buy aggressively recruited their leadership and you can see how they have changed their stores into Circuit City 2.0 over the years. Their newest prototype is literally converting a Best Buy standard format into a Circuit City style showroom/warehouse model with registers throughout the store instead of checklanes up front. All they need to do now is put a red tower on the front with the Best Buy logo on it.

Famously, they got rid of all the commissioned, skilled people and replaced with hourly wage workers. They also changed the format of their stores from a distinct layout with black ceiling tiles to a more generic Best Buy-like configuration.

[ClownLoach]

Having said that, they did not fail the first time for any reasons within their control. The company was nearly debt free, but they got killed by their own Wall Street force fed stock buybacks combined with the banking system credit collapse of 2008. The banks were looking for any excuse to cut off funding to everyone and when they filed a loss entirely based on stock price declines (and a touch of shrink) at the worst possible time they were immediately cut off which created a literal run on the bank by their vendors who suddenly demanded cash up front and forced a Chapter 11. Low margin retailers like electronics stores have to use factoring (financing) for all of their inventory; there is no other way to build enough cash on hand when you have items like laptop computers that sell with anywhere from a -3% to 2% margin (you read that correctly). All of the money is made in attachments (accessories, warranties, cables, services, software, etc).
Because all the credit was frozen everywhere they couldn't get out of bankruptcy. The liquidation began on a Friday and by Monday all the creditors were paid off. It was the most profitable liquidation in retail history. The great irony is that Best Buy aggressively recruited their leadership and you can see how they have changed their stores into Circuit City 2.0 over the years. Their newest prototype is literally converting a Best Buy standard format into a Circuit City style showroom/warehouse model with registers throughout the store instead of checklanes up front. All they need to do now is put a red tower on the front with the Best Buy logo on it.

Famously, they got rid of all the commissioned, skilled people and replaced with hourly wage workers. They also changed the format of their stores from a distinct layout with black ceiling tiles to a more generic Best Buy-like configuration.

Yes, I was there for all of that. They actually had a new prototype pretty much every year so none of the stores matched. The commission change was a damned if you do, damned if you don't move. There were commissioned salespeople making $100K a year or more. They couldn't find sales managers because it was pretty much a 50% pay cut for a top grossing salesperson in the President's Club (salesperson with at least a million in sales for the year). In retrospect the commission change did not damage the organization financially; it was in a period of time where prices were declining in computers and televisions by 40% annually as the margin dropped out of all those businesses and the salespeople would have been pissed off either way as they would have lost more on the commission plan if it stayed. Believe me we thought differently at the time, but when comparing the Financials versus the rest of the industry it was the right thing to do. The salespeople making $100K a year had already lost 30% to 40% of their earnings year over year and would have lost the same again. Then they would have been pissed off about their pay being slashed, having gone from $100K a year to $30K full time in less than 24 months. The people who were kept were paid between $20 and $25 an hour which is pretty damned good for a sales floor help job in the early 2000's, at the time a similar job at the competitors would have been about $7.25 an hour.

There were major consistency issues within the chain at a market level. Some markets like Orange County were great, and absolutely the best retail people I've ever worked for or with. I still talk to people from there I've known for decades. But being an older company they had a lot of old stores in lower end markets that Best Buy never really went into, and that necessitated heavy financing promotions as the customer was really just barely qualified to get a CC charge card and otherwise would have gone to Rent-A-Center or other such place. They never really thinned out the herd on the older stores in those lower end areas as they were afraid of the brand image of closing a hundred plus bad stores. Ultimately they had to anyway. Some markets were categorically horrific in management at the regional level, like Phoenix which I could hardly recognize the stores inside when I visited because they looked like something between Walmart and Montgomery Ward or Sears. When they closed the wave of "bad" stores it included every store in the state of Arizona which seemed odd to the outsider but seeing the mismanagement it made perfect sense.

The new Best Buy prototype is literally the 1998 build Circuit City "3000 series" all the way down to the new black ceiling. Probably because all the people who were working for Circuit City who developed the format are at Best Buy now.