Best Buy Insider Provides Perspective On Fall Of Circuit City

By Ben Smith



I recently posted an article that shared data on how Best Buy has performed since Circuit City closed.  The key point was that Circuit City’s market share was up for grabs, and every retailer that sells CE products had their own designs on capturing as much of that share as possible.  I didn’t spend much time in the previous article on the “why” of Circuit City’s demise, but now I can close up that loose end.

GREAT RESOURCE + PERSPECTIVE FROM A RIVAL INSIDER:

I found a great resource that fills in the blanks on Circuit City’s demise from a person I follow on twitter, @DonEames .  He is a former Senior VP of Best Buy, and now has his own management consulting company.  Even though he was not inside of Circuit City, instead inside of their key rival, I believe he had front row seats to the analyze the demise.  The analysis and candor he provides would be politically tough to get from a Circuit City insider, especially since it has only been a year since the stores closed.

Check it out – it is called “CIRCUIT CITY SIX: Six Fatal Mistakes of a Once “Good to Great” Company”. It is a quick and to the point read.  I found it to provide valuable insight to both retailers and brands alike, and for that matter, consumers who used to shop there (or avoid it).

VISUAL SUMMARY:

I started to summarize it but realized it is so succinct and to the point I wouldn’t do it any justice.  It is a summary in itself.  However I will tantalize you with images that represent the “6 Fatal Mistakes” that Don Eames discusses, so hopefully you’ll be intrigued to go ahead and click on through to the site.

RELEVANCE TO RETAIL LEVERAGE:

When we find valuable nuggets like this, we feel it is our duty to share with our readers, in case you haven’t seen it on your own.  Why is it important?  Circuit City’s departure from the retail market had huge implications for other retailers, but also the brands/vendors who sold their products there, and the consumers who shopped there.  From a brand perspective, in Circuit City’s final years, some brands had achieved great success in growing their business (at least in sales) by being willing to take a risk and bet big on Circuit City.

Some of those brands became very dependent on Circuit City’s business, and I am sure it was painful when Circuit City closed (and also didn’t fully fulfill their financial obligations).  Some brands went from having Retail Leverage with Circuit City and a broader base of sales, to being even more dependent on the remaining CE retailers, primarily Best Buy and Walmart.  The ripples from Circuit City closing changed the equation of leverage at retail, and retailers, brands and consumers all continue to be impacted.

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