Clueless Circuit City Scrooges Itself Out Of Christmas Sales - InformationWeek

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1/3/2008
08:33 PM
Alexander Wolfe
Alexander Wolfe
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Clueless Circuit City Scrooges Itself Out Of Christmas Sales

Yesterday I was railing against the ill-behaved legal eagles of the RIAA. Today's raspberry goes out to the executives in charge of consumer-electronics mega-retailer Circuit City, who canned their best employees and subsequently -- surprise!-- reaped what they sowed.

Yesterday I was railing against the ill-behaved legal eagles of the RIAA. Today's raspberry goes out to the executives in charge of consumer-electronics mega-retailer Circuit City, who canned their best employees and subsequently -- surprise!-- reaped what they sowed.What happened was, last March, Circuit City decided it would save itself a bundle by firing 3,400 of its highest-paid workers and replacing them with sales help making much less.

OK, so this isn't much different than what your average big corporation does with regularity nowadays, announcing layoffs every time a little stock boost is needed. Wall Street loves layoffs, you see. (I wonder how many CEOs have caught on to the fact that you don't actually have to go through with the huge cutbacks, you just have to make a big public splash about your plans.)

The thing about it is, cutting corners from the accounting department at United Widgets Inc. is a little different than shedding the front-line sales workers whose efforts flow directly to your bottom line.

Circuit City must've missed that part, because the predictable happened, and the company had a really crappy Christmas selling season. Three days before the holiday, the company reported a wider-than-expected third quarter loss, and said it wouldn't make money in the fourth quarter either. Its stock took a big tumble.

Meanwhile, as The New York Post reported: "While Circuit City has focused on cutting costs and relocating and remodeling stores, Best Buy has been staffing its shops with sales clerks specially trained to sell TVs, video games, and appliances. This week [Dec. 22], Best Buy said third-quarter profit soared 52 percent."

Turns out that "our employees are our most important asset" isn't just a Dilbertian mantra. People really do matter, even more so when it comes to selling PCs, cameras, and televisions -- stuff where most consumers are clueless and really do want a salesperson to help guide them through the process. One difference, though: these archetypcal customers aren't as clueless as the leadership of Circuit City turned out to be.

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