Tuesday, May 5, 2009

Why Circuit City Can't Blame the Economy

In the May 2009 issues of Inc., Joel Spolsky writes about the demise of Circuit City. Spolsky notes that everyone, from Circuit City's CEO to the Associated Press blamed "poor economic conditions" for the end of one of the nations largest retailers. Yet somehow Best Buy, Apple, and independent electronics retailers like B&H Photo seem to thrive in these conditions -- folks literally line-up on weekends to make purchases. Poke a little into the Circuit City business model, and you'll find the real reason for the failure: COMPELLING THE CUSTOMER TO SHOP ELSEWHERE...
  • Aggressively unknowledgeable salespeople, caused by firing anybody who knew anything about electronics.
  • Aging mechandise, including offering "Y2K Ready" laptops in 2007
  • A frustrating experience once the customer decided to buy
  • Uncompetitive pricing, including raising prices for the liquidation "sale"

Yuck! No tears shed here. It's how capitalism is supposed to work -- treat your customers poorly, and you will fail.

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