Why Circuit City Failed

As many of you have heard/read, electronics retailer Circuit City, after trying to get new investors/suitors like Blockbuster and contemplating bankruptcy protection, announced last month to shut all of its stores and began to liquidate and sell all remaining items and fixtures, a process that supposed to end on March 31. It is sad and not awesome to see a retailer collapse, especially one that your parents frequently shopped and got their television sets and Playstation 3s, and it's a little bit cruel to state that you took advantage of liquidation prices to pick up Rock Band 2 and a wired X-Plorer guitar controller for underneath 60 bones, like I did a couple of weeks ago, when it's the same retailer that got you three of your favorite games of all time - Guilty Gear X2 and Amplitude on the PS2 and the Gamecube version of Skies of Arcadia - in one trip many moons ago. However, a trip yesterday to my local Circuit City allowed me to examine why Circuit City failed. The reason?

THEIR PRE-LIQUIDATION PRICES WERE TOO HIGH!

Seriously. They had way higher prices for most of their products when compared to the direct competition like Best Buy (who was actually across the street in Savannah), especially for computers and computer accessories. Example: Yesterday's trip was the result of me wanting a new external hard drive. All they have (beyond the portables) was a 500 GB Western Digital My Book Essential; they had plenty of those on stock. The liquidation price was 30 percent off the displayed price. The displayed price? About $140. [/shock] Yeah, meaning the liquidation price was about $100. A fellow shopper near me, also looking for computer parts, said that he wasn't going to pay those prices and thought about heading towards Best Buy. So, shortly after the little conversation, I went to Best Buy. Guess what? The same 500 GB My Book was available, at $99.99, non-liquidated. You know what happened next? I ended up buying a different hard drive - a 500GB Seagate FreeAgent Desk - which only cost me $79.99. $79.99. And, I ended up using the $20 difference to pick up the Guns N Roses Chinese Democracy album. Talk about adding insult to injury. And, that's just one story! I bought my laptop in 2006 at Best Buy because they did away with mail-in-rebates and factored in the rebates into the actual price you paid up front, a technique I don't even know if Circuit City adopted.

Of course, it's not always about prices, because it it was, we would be ruled by Walmart. When I was at work later that night explaining my trip, a fellow co-worker expressed two seperate instances where Circuit City's customer service was crappy to him. In one instance, the store charged him more for a season set of South Park, even though it was in a bin with a bunch of other South Park seasons on sale for 20 bones. In another instance, he asked a clerk in the gaming department if Guitar Hero 3's Les Paul guitar (PS3 Version) would work with other guitar games on the system; the clerk was clueless (although in this situation, I would have consulted Joystiq's Instrument Compatibility Matrix for help, in which it says it works with all of them). Prices sometimes mean nothing if good customer service is factored in. The last remaining factor, the only place in town that carries said product, can be rendered pointless with online shopping unless you lack the means (again, becomming more pointless with gift cards being able to do online shopping).

So, in hindsight, Circuit City was probably destined to fail. But, I didn't get bad customer service from them when I was there, and if they had the crap I want (like anime) and weren't gouging me for them, I would have shopped there more. Alas, by March 31, Circuit City will join the ranks of Goody's, Montgomery Ward, and Toonami in becomming nothing more than a distant memory. I hope those that are affected (like employees) hopefully land on their feet and get new jobs as quickly as possible, despite how crappy this economy is. And, I hope that the executives weren't Greedy McMoneybags in causing its destruction, like those who sold Midway Games for $100,000 plus the debt.