Circuit City Sales

Five Reasons Why Best Buy Could End Up Like Circuit City

If you are a consumer electronics manufacturer or brand and you are in Best Buy or Magnolia - you brag to anyone and everyone who will listen about how great it is. They are the last giant standing in the world of big box retail specific to home theater, AV software and audio with the ability to make one purchase order that can change an AV company forever. With players ranging from Circuit City to The Good Guys to Ultimate Electronics to Tweeter to regional chains like Myer Emco to AV software players like Tower Records - all are dead meat in this lean and mean new economy. Best Buy has aggressively grown to eat up the remaining specialty AV or big box AV retail market share but now all of a sudden they are on the rocks. Analysts are losing confidence. Revenue and profit reports are being tempered downward in tough economic times. And more than ever the chirps from well known AV industry executives are starting to suggest that if Best Buy doesn't straighten up and fly right, that they too could be added to the list of new economy fallout which would be a game changing outcome in the AV and consumer electronics industry. The number one reason why Circuit City went out of business was some suits and bean counters decided that they could make more quarterly profits if they forced their top producing salespeople to take a puny fixed salary over commissions. For some of their best salespeople - this was a pay cut of over $50,000 per year. Sometimes, it was even higher. For all of their salespeople, this was a demotivating influence that turned their salespeople into the same kind of clerks that Best Buy has in their "blue shirts." Why should a clerk learn all about selling speakers when he/she likely will be selling cell phones, appliances or doing check-out work, all in a week? Theoretically, she makes pretty much the same amount of money if she is fantastic at her job or she just sleepwalks through the workday as many low paid clerks do in retail stores all around the country. If Best Buy wants to convert more of the people who pack their stores on any weekend day - give the salespeople a reason to share in the store's power and success. Reward people who become top salespeople and make $100,000 per year because that is only going to make the stock go higher - a feat that Best Buy hasn't seen recently.

Problem No. 2: Best Buy Should Be Renamed "Worst Value" In a retail climate driven by warehouse stores that operate on razor-thin profit margins - Best Buy is outright trying to rip their clients off with some of their pricing. Magnolia confusingly prices their speakers "by the speaker" when they actually only sell in pairs. Their HDTVs are listed at retail price when they sell for upwards of thousands less on the Internet. Most importantly, Best Buy's software is an absolute rip off - and consumers know it. Is there value to a point of purchase sale right in your hometown? Absolutely. Every American wants what they want and wants it now but how much of a premium are they willing to pay when unemployment is at nine percent and we are nearly three years into a punishing recession?

No Deals at Circuit City

Would you knowingly spend $435 more to buy a big-screen TV at a store that going out of business? How about paying double for a computer printer?

Probably not. But those were some of the "deals" we found during the opening days of Circuit City's liquidation sale.

We compared Circuit City's prices this weekend with those charged by other retailers. We also looked the advertised prices in this week's Circuit City circular, which, though distributed in newspapers, is not being honored by the stores. The advertised sale prices were in some cases hundreds of dollars less than what we saw at the liquidation sale on Sunday at the Circuit City store on E. 14th Street in Manhattan. And in most cases, we found much better savings at Circuit City's competitors.

Billboard

Analysts estimate that music and video account for 6%-7% of Circuit City's sales . But Circuit City does not appear to be shrinking from a store-expansion ...

Billboard

In 1997, Circuit City and Best Buy were roughly the same size, with the latter reporting $7.8 billion in total sales at that time, while the former was at ...

Billboard

Latest figures from the Consumer Electronics Assn. show 2003 sales to ... For DVD-A, Circuit City has two Panasonic HTiB systems for DVD-A/CD/DVD and a ...

BusinessWeek

Although Zodys accounted for 15% of Circuit City sales last year, analysts estimate it barely broke even. Circuit City is leaving Zodys and switching its ...

Plunkett's Retail Industry Almanac 2008

Circuit City's web site provides shoppers with extensive product ... Richmond, VA 23233 US FINANCIALS: Sales and profits was not available for all companies ...