Am I The Only 1 Surprised By Cicuit City's Demise?

Electronics in general is a cut-throat business, look for online retailers such as newegg and others to consume market share, at the expense of more "big box" electronics stores.

Circuit City?

They were opening up stores across the street from Walmart and Target (Cleveland TN), and trying to sell the same kinds of products at twice the price...

Of course they sank, even Blockbuster wouldn't touch 'em.

Believe me, Walmart is in BIG trouble over this issue. They have their profit margins
slashed to the bone and the color of their carpet is dictated by the color of the
motor oil their customers track-in. Walmart has always positioned itself only
as a place to get CHEAP prices and now they are struggling to reposition the
company in the public mind.

Walmart is so Cheap people have been murdered in the parking lots because
security wasn't adequate. On one level it's a good company because it gives
people what they think they want but on other levels I find it despicable.

Derek,

I hate to burst your bubble, but as a product designer who has helped develop many products that are selling in W-M I can tell you first hand they absolutely sacrifice quality for the sake of cheapness.

You need to remember that W-M does such a huge volume that they are able to dictate what they will and will not pay for.

As an example, if the componants of a given product are built using "A" quality parts, and the buyer for W-M thinks that "B" or "C" quality part will do the job just fine they will stipulate that the line of products going into their store will need to be built with the lower quality parts to save cost.

This isn't just unique to W-M. either. A common misconception among consumers is that all models sold by a manufacturer are equal in quality throughout the distribution chain. Nothing could be farther from the truth.

It comes as no surprise when you go comparison shopping that trying to match exact model numbers on a given product across multiple retailers is almost impossible. Most retailers have their own set of specs on the products they sell.

Getting product placement in W-M often involves some very tough negotiations. Their buyers are extremely knowledgable. Not only about what a product will sell for, but also in the cost of manufacturing that product. If they see a way to shave the manufactors cost of production, they will want that savings incorporated into their purchase price. Even if it means cutting corners and/or quality to get the price down.

Adam,

Most shoppers are not aware that when a store liquidates their merchandise they don't go willy-nilly reducing the prices. In fact, they turn the whole ball of wax over to professional liquidaters who are skilled at getting the most dollars for the items "on sale".

In many cases this means repricing the items to higher than MSRP so that any discounts perceived by the public are in fact somewhat illusional.

Bottom line...there are no free lunches. Anytime you go shopping based strictly on price you are going to get what you pay for. The retail environment is a very sophisticated arena.

The success or failure of any given retail enterprise relys on many factors both seen and unseen. One of the unseen factors that the successful retailers use is the ignorance of the public in general of how the game is played.

As an insider in this game for many years I can tell you that what goes on behind the scenes is cutthroat at best, and downright deceptive at its' worst.

Believe me, internet marketers have nothing on those boys. They wrote the rules way before any of us were born.

KJ

I'm from So Cal - so it's a point of reference for me. It seems to
me that you are saying you MIGHT be willing to pay a higher
price for a higher-quality experience?

Ah-ha - you are starting to see the opportunity here? People whose
time is worth more than $10 an hour are willing to pay more for less
hassle... the higher up you go on the income scale the more the
affluent will pay for getting what they want, quickly, with minimal
confusion and hassle.

Circuit City's demise is rooted in that none of us had the impression
that it offers anything special... so because of this factor most
people would choose to shop there only on terms of price or
accessiblity - ie. no loyalty.

Somebody mentioned Sears - and Sears will, I believe, triumph - because
Sears continues to offer service above what others do. Sears
in it's humble way understands the lifetime value of a customer.

I'm not suprised, but only because I saw an article about 10 months ago that listed the 10 big businesses that were going to go under. I can't remember many on the list, but "Old Navy" was another one.

I purchased my last desktop & laptop from Circuit City. I bought them during sales, and got really good deals. I haven't had any problems with them, but the signs have been evident for the last 4-6 months. Some of the employees have been restless and when I mentioned what I had heard about the future of CC, they had heard rumblings of it, too.

Funny side note: I just got a postcard from CC in the mail, yesterday, offering an extended warrantee on my desktop computer. I won't be purchasing that particular package.

Cool side effect: We may be able to pick up some killer deals during their Going Out Of Business Sale!