The Fall of Circuit City Stores, Inc.

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Mistakes made by Circuit City:

- The successful chain of CarMax has been sold to get extra cash flow needed for operating business

- Circuit City fired most of its employees to less the operating expenses and improve the cash flow.

- In 2003, the company laid off 1800 of his employees in order to change from permanent employees to hourly based employees

- In 2007, the company laid off an additional 3400 employees.

- Circuit City kept on remodelling the stores for which it took a budget of 3 million for 26 stores where the goal to be reached is 140 stores. It took a long time to finish this but the cost is too much which made the remodelling to be stopped.

- In the retail world everything depends on location, but these stores are located in very in accessible locations.

- In this thing Best Buy secured prime estate locations which are near and readily accessible which is not met by Circuit City.

- At the right time when the boom for home applications has increased in early 2000’s the City Circuit decided to walk out from home appliances.

Recommendations:

What Circuit City could have done, so that it would had not been liquidated?

- Would have focused on Customer and employee satisfaction, so that the word of mouth would have saved the reputation of the company and the banks could have been interested in giving loans.

- Closing more locations in the most remote parts rather than all the locations, could have reduced overhead & improve behaviour that would have maintained the performance level.

- The updated look to all the stores would have represented the new approach by the company.

- Incentive based pay for all the employees, who are in contact with the customers would have motivated the employees and made they work more than expected.

- The goals and decisions of Circuit City could have been clearer so that the employees could have known what exactly they have to do and where to reach and what to expect in the future.

- Need a more experienced and fully efficient management team.

- Be more aggressive in buying more locations at good and accessible places.

- Be more aggressive in marketing and word of mouth could have helped

- Make firedog available to more locations and stores