What's Wrong with Circuit City

Electronics retailer Circuit City has announced it is closing 155 stores, resulting in layoffs for almost 20% of its employees. The company blames a weak consumer economy and tight credit as constraints that have left it exploring all available options to keep the company afloat. Despite closing stores, Chapter 11 bankruptcy is still a possibility in the near future.

What went wrong? Circuit City has suffered the same problem that many also-rans encounter: lack of a distinctive brand position. Best Buy has excelled in the areas of product choice, customer service, and employee satisfaction. Wal-Mart has mastered the low price position. Amazon.com has product selection and customer interactivity as key strengths. Circuit City simply does not stand out in a competitive landscape.

Circuit City has not helped itself in the court of public opinion. In 2007, the company collected heaps of negative press for a decision to let go more experienced, higher paid store employees and offer to rehire them... at a lower salary rate, of course. Also, negative customer sentiment is abundant on the Internet. The search term "Circuit City sucks" returns many web sites and blogs at which Circuit City customers share bad experiences they have had. Lack of a solid brand position, coupled with lack of a good reputation for customer service, leaves Circuit City in a fight for survival.

Link: Reuters - "Circuit City to Shut 155 Stores, Mulling Options"