Circuit City shows us the business model for success

[chiefjay]

The model in the IT industry is ... hire people in India to handle the job remotely. For every American job cut you can hire 3 to 4 Indians.

 

 

I think the proper term is Native Americans.

[Ursa Majoris]

The model in the IT industry is ... hire people in India to handle the job remotely. For every American job cut you can hire 3 to 4 Indians.

 

It's not the whole model. There are some serious quality issues with some outsourcing that can quickly eat up savings made through salaries - I've just this month fired an outsource development company. In the right place and right role, it's OK but outsourcing is not the massive nuclear threat it was once thought to be unless you're prepared to see quality and service take a hugh dip and you're prepared to have your customers leave.

 

Some service levels simply can't be outsourced.

 

Also, the great American public has already voted with it's feet in response to Indian based call centers.

[H8tank]

Haven't you cavemen heard of the internets?

 

Who the hell ever goes to those stores anymore?

[Ursa Majoris]

Haven't you cavemen heard of the internets?

 

Who the hell ever goes to those stores anymore?

 

Makes sense if you a. want to have a hands-on session before buying (as you definitely should with anything like speakers or HDTV) or b. want to finance with interest-free credit.

 

Note - might be able to do the latter online as well.

[TheGrunt]

i dunno....if you go into one of those box stores expecting reliable, informed advice to help guide your purchasing decisions, i'd say you've put yourself behind the 8-ball from the get-go. i go into those stores assuming the only usefullness the idiots in the blue or red shirts can provide me is to help me find which aisle something is in. with that in mind, i have to say it's probably a good idea for CC to focus on lower-paid labor. truly knowledgable (and thus more highly-paid) sales staff have a place at boutique stores, where the customers willingly pay more for knowledgeable staff help....but they're sort of out of place at one of the big box stores that is trying first and foremost to compete on price and drive volume.

 

exactly, plus they can train a staff of monkeys to learn the basics of the equipment which is all they need to know...

 

Why not fix the problem completely? I have no doubt that a retail store saves a lot of money by trying to higher cheap unkowledgable labor, but how does that help the customer? It sure doesn't improve customer loyalty, and it definitely doesn't improve customer service. Plus, as they bring in the new low-paid employees they also have to spend hours training them.

 

If these big retailers want to save money and improve customer service, they should utilize something like this. Place one of these bad boys in each department of the store, so that way the customers can get real expert advice, and when they need it. Not when the employee finds time to make it your way to answer some question using the most amount of BS possible.

 

That's my

[Wolverines Fan]

But I'm sure the exec that had this thought will get a hugh bonus. CC will go the way of Pacific Stereo and the rest.

 

 

This is what always makes me . When a business struggles, it seems like it's always the employees way down on the company food chain that lose their jobs, while the executive that made the bad decisions keeps his/her job and gets a pat on the back (bonus, stock options) for coming up with the idea to launch the employees.

 

CC's prices do not seem very competitive with BB's, at least where I live.

[xMRogers]

You have to remember that CC was not developed to be so much a BB/Walmart but to be a larger boutique store. They were never the cheapest, but they were the place you went where the folks were knowledgeable and you knew they had what you wanted.

 

Then the world changed on them - between Walmart, BB and the Internet, they had to figure out if they wanted volume or quality....and they kept screwing around with it for too many years.

 

Now, they are getting killed, and their overhead is built for a lot more stores than they have...they close a few every month (they are a custoemr of my company) and are to the point of having to cut everything.

 

They will be filing within 12 months would be my guess - then see what happens from there.

[Chargerz]

They will be filing within 12 months would be my guess - then see what happens from there.

 

I will not be sorry to see Circuit City go. I had problems with the local CC a while back, cut up my CC card, and have shopped with satisfaction at Best Buy ever since.

[Wolverines Fan]

You have to remember that CC was not developed to be so much a BB/Walmart but to be a larger boutique store. They were never the cheapest, but they were the place you went where the folks were knowledgeable and you knew they had what you wanted.

 

Then the world changed on them - between Walmart, BB and the Internet, they had to figure out if they wanted volume or quality....and they kept screwing around with it for too many years.

 

Now, they are getting killed, and their overhead is built for a lot more stores than they have...they close a few every month (they are a custoemr of my company) and are to the point of having to cut everything.

 

They will be filing within 12 months would be my guess - then see what happens from there.

 

 

Interesting stuff. They are really getting clobbered, huh?

[Caveman_Nick]

This is effectively saying to the work force - F you and your loyalty, F off.

 

 

 

 

But where do you shop? THe store with the loyalty to employees or the store with the best price? Do you care when you are buying a TV or whatever how much the schlub at the store gets paid?

 

Most people shop the low prive provider, and just crab about the other stuff.

[cdrudge]

But where do you shop? THe store with the loyalty to employees or the store with the best price? Do you care when you are buying a TV or whatever how much the schlub at the store gets paid?

Depends on what I am buying. If I'm going to buy something that I know about then what even a good salesman would know, I go for the cheapest price. But if I need advice on something, I go with service.

 

I work for a national hardware store co-op (think Ace, Do it Best, Tru-Value). If I need a pack of screws or a toilet repair kit, I'll still go to Lowes or Home Depot as their pricing is better. If I need recommendations on installation, installation services, etc I'll go to one of our stores as the service is considerably better.

[Kid Cid]

And people wonder why I tell them to never go to BB and or CC to buy electronics.

 

Stick with your mom and pop stores. Yes you pay a premium, but in most cases the additional service and information you get far outweigh the extra cost.

[Ursa Majoris]

But where do you shop? THe store with the loyalty to employees or the store with the best price? Do you care when you are buying a TV or whatever how much the schlub at the store gets paid?

 

Most people shop the low prive provider, and just crab about the other stuff.

Without doubt I could get the best price on a lot of things at Walmart but I would sooner stuff three starving ferrets down my pants than enter one of their stores.

 

So, yes, I do use principle when shopping.

 

Depends on what I am buying. If I'm going to buy something that I know about then what even a good salesman would know, I go for the cheapest price. But if I need advice on something, I go with service.

 

I work for a national hardware store co-op (think Ace, Do it Best, Tru-Value). If I need a pack of screws or a toilet repair kit, I'll still go to Lowes or Home Depot as their pricing is better. If I need recommendations on installation, installation services, etc I'll go to one of our stores as the service is considerably better.

Yep. Home Depot for bog standard stuff, local hardware store when I want something out of the ordinary and some useful advice.

[chiefjay]

(they are a custoemr of my company)

 

They will be filing within 12 months would be my guess - then see what happens from there.

 

Inside info, thanks for the tip. Looks like I'm shorting it.

Edited March 30, 2007 by chiefjay

[Big Dogs]

At least locally, the exact opposite is true. Its CC that gets commission, and BB that has the local high school hourly-wage boobs. I find both to be equally annoying in their own way.

 

 

Best Buy does not pay their sales people commisions. I cannot speak as to what CC does.

 

 

Ya CC pays commish and BB dosent from what I understand.

 

 

 

I've been a sales / product manager in the consumer electronics industry for the last 13 years and I can tell you with certainty that neither Best Buy or Circuit pay their people on commission!! About 6 years ago, I was actually one of the category sales guys on the Best Buy account. There may be a few local exceptions to the rule, but corporate policy at each store is no commission.

 

"Directed Selling floors" or commission as most people call it when out the window most places in consumer electronics a long time ago. Vendors are not even allowed to do "spiff" programs to the floor sales reps any more (ie....sell my brand and earn money or a prize).

 

One thing that Best Buy does over Circuit is that Best Buy floor associates actually do have sales quotas, and can earn points towards an internal sales contest. Twice a year, BB holds what they call the Best Buy Achievers event, in which the best performers from all the stores in the country are brought in for a several day conference. Best Buy then has all the vendors come in to "pitch" their products and we have to buy booth space at about $25k for a 20' x 10' space. Vendors are also encouraged to allow all the Best Buy Blue shirt achievers to "win" prizes of products or have nice give aways.

 

Let me tell you, these achievers clean up. The last BB achievers event I went too a couple years ago, each BB achiever received a fully loaded HP laptop, Sony Camcorders, digital cameras, Microsoft Office software, LCD tv's, MP3 players, Telephones, etc, etc, etc. This is in addition to other vendors who sponsored grand prize drawings which included trips to Hawaii, the Carribean, and other stuff.

 

That is why you see agressive Best Buy associates. They don't get commission, but if they win a trip to an achievers event, they can clean up!!!!!!

[Wolverines Fan]

Without doubt I could get the best price on a lot of things at Walmart but I would sooner stuff three starving ferrets down my pants than enter one of their stores.

 

 

 

I feel the same way, but I go there anyway. Our Wal-Mart is only three miles away and it's a 24-hour supercenter. Can't beat the prices.

[Skilly]

It's not the whole model. There are some serious quality issues with some outsourcing that can quickly eat up savings made through salaries - I've just this month fired an outsource development company. In the right place and right role, it's OK but outsourcing is not the massive nuclear threat it was once thought to be unless you're prepared to see quality and service take a hugh dip and you're prepared to have your customers leave.

 

Some service levels simply can't be outsourced.

 

Also, the great American public has already voted with it's feet in response to Indian based call centers.

 

 

...........voted for Sanjaya!!

 

 

I've shopped at both places---I prefer Best Buy, but if I can find the same item cheaper somewhere else, I'll go there.