Circuit City Says Farewell
After turning down a Blockbuster offer that was a premium to their then valuation back in April, Circuit City has fallen on harder times and announced January 16th, 2009 on their website that Circuit is going out of business. This affects 567 stores across the US and will result in 34,000 jobs lost. Canadian Circuit City stores will remain in operation.
Unfortunately, Circuit City’s close did not come as a surprise as the economic environment continues to worsen. Having watched big box companies including Sharper Image, Bombay and Linens and Things close their doors and others scaling back on the number of stores including Starbucks and Home Depot, I was actually amazed that a company like Circuit City was still alive.
Circuit City made the decision to pull out of the area I live first (Atlanta, GA) and about a month ago I visited literally a week before the official closing of a nearby store. Walking with my iPhone in hand, I compared prices of the heavily marked down merchandise (30%-40%) with e-tailers including Amazon and Buy only to discover I could get the same merchandise for the same amount or even less with free shipping from the e-tailer! I walked out of the store with nothing in my hands. In fact, I’ve only walked out of that store with some Sony memory once before because I needed it at the last minute. After getting home and checking the same memory on Amazon, Circuit City’s price was double what I could have gotten the exact same product at Amazon if I had planned better.
Consumers are not stupid and with better tools such as the Internet and smartphones people search for the best deals rather than simply showing up at Circuit City to purchase a new laptop or TV. Smart consumers come armed knowing which product they want that contains the feature set they want and know how much they can purchase it for online. If a consumer does decide to grace your brick and mortar store with their presence, you sure as hell better treat them with respect and present them with excellent customer service. Retailers cannot afford to piss off one customer as that information can spread virally via the Internet.
The above applies doubly to retailers in the tech market (gadgets, computers, audio/video), as this class of consumers — our readers for example — are especially adept at using tools to find the best deals.
Big box stores need to rethink their strategy or just become another entry in Wikipedia.
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