Circuit City looks to better 'customer experience' after another loss

By Jacqueline Emigh | Published September 29, 2008, 2:20 PM

The struggling consumer electronics retail chain today blamed its continuing financial losses on a 'weakened brand image,' together with competitive pressures and the faltering economy.

US retailer Circuit City plans to put more emphasis on "improving the customer experience" in its stores, in the wake of a $162.7 million loss for the second quarter of its 2009 fiscal year. Earlier efforts to do that haven't been "sufficient to reverse our overall business results," acknowledged Bruce H. Besanko, executive VP and CFO.

Circuit City has been "gaining traction" in bettering the customer experience, as well as in "rebuilding [its] selling culture" and improving its close rates on sales, Besanko said in a statement today.

However, the consumer electronics retail chain has undergone a "significant decline in traffic," Besanko said, placing the blame on a "weakened brand position" along with competitive pressures and a worsening of the overall economy.

Circuit City did show some growth in home theater installations over the same quarter last year. But these gains were offset by a decline in its Firedog PC services. The retailer also felt double-digit losses in notebook and desktop PCs, audio, and digital imaging products such as camcorders and DVD hardware, although losses were only in the single digits in some other categories, such as video gaming, flat panel TVs, and navigation products.

Yet it seems to singing a more frantic tune right now than over the two previous quarters, when its sales also slid downwards.

Two quarters ago, the chain's sales numbers "showed some progress, and we expect continued improvement from our turnaround strategy for fiscal year 2009," said CEO and Chairman Philip J. Schoonover, in a conference call with analysts in early April.

Then, in a statement issued after the close of the first fiscal quarter, Schoonover maintained that Circuit City seemed to be delivering an improved "customer experience" at the time, based on the result of scores of third-party "mystery tests" -- a type of test in which paid personnel typically pose as actual shoppers and then report back on their experiences.

In response to its second quarter loss, Circuit City plans to undertake a "comprehensive review of the business," and the company has already identified "key initiatives to drive performance in the holiday season," according to today's statement.

Comments

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I mentioned that before.. They should not have fired seasoned employees last year. Very incompetitent CEO results in company losses. Not surprising at all.

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Use the "Post a Reply" button and we'll know what post you're replying to.

I do agree with your comment.

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The best thing they could do to improve the customer experience would be to lock the doors and go home.

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perhaps, one of the worst sales tactic these companies enjoy is to advertise a price.

then you come to find out it is based on a rebate.

then after you go through the trouble of mailing the rebate, you'll never see any money as promised.

if cc and bb wanted more business, then they would apply any and every rebate instantly at the time of purchase and then they would go through the trouble of getting refunded by the manufacturers....!!!!!

maybe then we might beleive they cared about our business.

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The reason for the rebates is that not everybody will take the time to send them in. So they aren't having to give out the discount to every customer that buys the product, allowing them to give bigger incentives to the ones that do take the time to send them in.

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I am a bit surprised that anyone buys anything from either CC or BB.

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what other options are there, except from buying through the internet?

most people simply enjoy walking into a store and touching/feeling the product they are interested in.

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"what other options are there, except from buying through the internet?"

There are several, depending on what part of the country you live in. And I am still surprised that any informed consumer familiar with what they are interested, frequent either BB or CC.

But some don't need to fondle items or buy on impulse - and for those why do they need any other options when the selection is greater and the price lower online?

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The price is not always lower after shipping. Also where are these other places you speak of? Radio Shack(spits out drink)...I'm sorry can't even keep a straight face on that one. Unless you live in the metroplex the other options just aren't there.

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Best Buy and Circuit City both hold salesperson meetings to discuss pushing expensive extras like those awful Monster cables and a BB produced $25 cleaning cloth that you can supposedly only use to clean plasmas, LCD's and DLP rear projection TV's or you could void your warranty.

Not to mention the "extended warranty". Luckily for Best Buy, people are too scared or stupid to say no.

Anyone in here who has BOSE equipment or a single Monster product in thier house is a gullible moron.

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You're the owner of a shop and you would tell your salesperson to sell products at little margin or at negative margin, rather than products with high margin? Service has always been the place to earn money because there's no such "stock".

Product service plan is there to let people have easy, longer and fast support, and no shipping warranty service. And not to mention the limited and little warranty the manufacturer offers (1 year or 90 days for accessories)

You're telling me that you can't hear the difference between a BOSE sound system versus logitech or some other brand?

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"Anyone in here who has BOSE equipment or a single Monster product in thier house is a gullible moron."

I think YOU are a moron for saying that. I have the quietcomfort 2 headphones and if you did a little research you would find that most tests finds it the best noise reducing headphones available.

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there is a diff but what he probably meant is that bose itself isn't that great especially for the price. They're are many audio engineers that go on and on about how bose is not worth your money. check out avsforums, they can explain it way better than I can if you don't mind reading endless posts.

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Both companies have a well documented history of marketing products with misleading, and in several cases, absolutely incorrect claims and refusing to modify these products or claims when objective verification of such behavior is documented.

Two such cases in point, Bose's direct-reflecting concept which introduces even more of the early arriving reflections which are specifically responsible for the lack of localization and intelligibility and imaging (re: Haas interval and the Henry Precedance Effect); as well as Monster's amazing 'frequency balanced' interconnects whereby various conductors carry different frequency signals - more commonly known in the indusry as a crossover - as they cite phenomona such as skin effect which is superfluous at the audio frequncies involved - but oh, it sounds so advanced and technical!

A prime example of marketing technobabble masquerading as fact taking precedence over physics.

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There are plenty of headphones out there better than Bose...I am no expert on this, but I hear that Sennheiser puts out a great quality headphone.

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Nice try Daddy,

I have two pairs of Sennheisers and I tried the BOSE QC2 and QC3 headphones first. Not even close.

Then again, the Sennheisers are $100 more than the BOSE, which would explain why they sound better.

Spoken like a true BOSE fanboy.

You own the McDonalds of noise cancelling headphones. I have the Ruth Chris steak house version.

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Well said siryak,

Even my wife said the BOSE sounded flat compared the Sennheiser PXC 350's, and those are the cheaper pair out of the two I own.

BOSE = junk, and two of junk is still junk.

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Tomorrow's headlines "Best Buy Retail Buys Circuit City".

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When our local Sun TV closed we were all sad because it was the only place besides Radio Shack that carried computers and so on (if Radio Shack even counts, LOL). Of course, we knew it was coming because the place had went to hell in a hand basket. I remember how exited I was when we finally got a Circuit City in the nearest major town. And for a couple years it was awesome. Shelves bursting with relatively new items, some of which you could actually afford! The funnest thing was all the goods with no prices on them. Me and my friends have gotten some amazing deals thanks to their total incompetence with pricing. Of course they always tried to lie to you about warranties and so on, and they would never print out the mail-in refund forms until you made them. And for a long time it was impossible to get any help unless you were a pretty girl..and when you did they were usually clueless. Boy, things sure have changed lately. Helpful, often knowledgeable employees, but what little product they have on their half-empty shelves has been out for at least six months. DVDs that you can get for 20% less at any other store and even cheaper online. I'd sooner buy a TV from Wal-Mart, where even the warranty is cheaper. And Firedog? Didn't they learn anything from that Geek Squad debacle at BB? 21-yr olds with networking degrees working for peanuts blowing dust out of old cases. In short, its Sun TV all over again.

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I bought a TV from Circuit City. The whole experience was like dealing with a underhanded carnival booth worker. They tried to sell me over a $1000 in extras that I did not need. Lucky I am an educated electrical engineer and could see right through their carnie type schemes. I really pity less technically knowledgeable individuals that choose to deal with Circuit City. They could do allot by eliminating the underhanded sales techniques and and dropping prices. I cringe when I walk in the door to that place.

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At this point I think CC is beyond any hope of recovery. They spent most of the last two years hemorrhaging money with management that seems to be in denial that anything is wrong with their business model. Their products are too expensive to compete on the low end and their employees have too poor of a reputation to compete on quality of service. Even the new management sounds like they are in denial that the company is going to need a dramatic s***.

Within the next year CC will either get bought out or go bankrupt. It's more likely to go under since retail electronics is a pretty crowded space right now but given their market cap is under $200 million as I am writing this there might be some larger retailer like BBY that might want to buy them out and consolidate some of the underperforming stores.

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The only person I know who buys DVDs anymore is a punk teenager brother of a friend of mine. Everyone else has Netflix. Likewise, nobody I know buys anything from Best Buy or Circuit City. The prices are terrible, it is always cheaper to just buy online from Amazon, Newegg or Dell direct.
However, as a place to walk around and look at the picture quality of TVs before buying one online, Circuit City works well. No other customers crowding around, no employees bothering you, just you and the TVs.

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Being 54, I'm hardly a punk teenager. I was a teenager once however, a loooong time ago. ;-)

My wife and I have a large DVD collection, since we don't have cable TV or high-speed internet. We buy the films and shows we like on DVD, so we can watch them anytime we wish. We like old films and TV shows, have a nice collection, and enjoy creating our own programming, since there's nothing on cable or broadcast (save TCM) we'd ever want to watch. Netflix simply doesn't work for us.

So yes, retail DVD sales play a role for people of all ages, not just with kids. In fact, our best friends are half our age, and they are big retail DVD buyers/collectors as well. As for the prices, they have some great sales at BB if you keep your eye on the ads.

Cheers! :-)

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Perhaps you mean that CC and BB are lousy places to buy DVDs...

Online sources are better, more afordable places to buy DVDs.

And yes, plenty still buy them. But then, I am not in the habit of paying 3/4 of the purchase price to rent some disposable Adam Sandler or similar trash.

Just like I still buy music CDs, primarily from online sources for reduced prices - but NOT the limited selection of overpriced and primarily 'greatest hits' CDs that dominate the BB, CC and WalMart's racks.

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I purchased a Camera from them 6 months ago with the accidental damage warranty. It may be time for the "accident" before the store closes!

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well lets see

uninformed and mostly UNFRIENDLY sales people. Store layout BORING and uninspiring. More stuff online than in stores. Horrid price matching. shall I go on

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funny,

it has been over a month and i am still waiting for a response to a simple inquiry from their sales staff....

no more games, circuit city is history. there is simply better service provided by others.

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As much as shopping Best Buy can be an annoying experience, a least I *know* I won't have to go hunting for someone to help me find an item in their store. The lack of informed employees is the first and most frustrating service issue at Circuit City.

The initial merchandising change CC needs to implement is to make their DVD section far more accessible. They need to look at BB and see how their DVDs are set up. CC markets DVDs face out instead of spine out, and if you try to flip through them to see what they have, you will end up knocking discs onto the floor. And it is, believe me, the DVD section of BB that gets everyone I know to go through the door in the first place, whether they buy anything else or not. The DVD shelves and new releases get people into these stores. If they can't browse the DVDs at CC, they'll go across the street to BB.

CC made a mistake awhile back, jettisoning their most experienced and knowledgeable store employees, just to save a couple bucks. Major idiocy, for by doing so, they kept only the minimum wagers who know nothing about the merchandise and have no people skills.

I hope CC higher-ups read this. I've been a looooong-time customer, but I'm now paying off that card. I have long defended CC over BB, but no longer. Best Buy has my business now.

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I completely agree with you. Whats the old saying "penny-wise, pound foolish.

They should get rid of their overpaid CEO's and put some new ones in that are willing to work for less wages...

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I'm not trying to be rude, but it just astonishes me whenever people try to down a huge corporation for its' employees in one of thousands of its' stores. I can PROMISE you I can find crappy employees in ANY chain out there. Personally the employees in my local CC are awesome and the ones at Best Buy are ignorant and rude. Your mileage may vary. :/

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YMMV indeed! :-)

I am "downing" the corporation simply because CC let go their most senior, informed, experienced, and yes, well-paid employees, in a money-saving move. How do I know this? Because I asked where certain great employees went, and was told this. Not to mention finding this info online. It was a corporation-wide move, not a local one.

CC made major mistakes and are now trying to rectify their errors with "comprehensive reviews" and "key initiatives," to which I say PFFFT! They lost me already.

Locally, BB is literally across the street from CC. Any given day, look around CC and you may see 4 to 6 red s***s. Take a walk to the BB, and you'll see at least a dozen or more blue s***s. That speaks volumes to the customer. It's called service.

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...Your point? Whenever you are in the red something has got to change. They are in business to MAKE money. BB doesn't have this problem because they don't really have any "senior/well-paid employees" to start with. I honestly don't think I have ever seen anyone over his 30s in that store.

Not to mention the "your mileage may vary" still applies here. In my BB I have gone in there twice with the intent to buy(once for a 50" plasma and another for a top end gaming computer) and came out emptied handed every time because the employees either never would even look at me or were incompetent. I had one employee try to argue with me that I would be better off with an AMD with a much slower clock and a 9300 GS rather than a computer with a Intel Q6600 and a 9800GT for gaming. The next thing they got to see was my back going out the door.

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And your point seems to be to pick a fight with me. Why? :-)

In the 5 BB stores within 30 minutes of my home, there are several employees in each who are in their 40s, 50s, even 60s. And not just the door-watcher courtesy clerks, but experienced, informed repair personnel, computer sellers, etc. You base your assessment of BB on one store. There are incompetent employees at every store and in every company. That's just reality.

CC jettisoned all their best people, yet can't understand why they are even further in the toilet now than before. THAT was my point, which you seemed to ignore or miss.

Have a great evening! And for God's sake, lighten up! :-)

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I've probably been to 50-70 starbucks in my life and I've yet to have a negative experience, other than the taste of the coffee is sub-par (but much better than most coffee shops, hence my business.) Starbucks does customer service 100% right in my book.

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I am not trying to pick a fight with you at all. I am just trying to stress my point that "your mileage may vary."

"You base your assessment of BB on one store. There are incompetent employees at every store and in every company. That's just reality."

That is my whole point!

"CC jettisoned all their best people, yet can't understand why they are even further in the toilet now than before. THAT was my point, which you seemed to ignore or miss."

You can't really blame them whenever they are having to pay high salaries to them. They simply can not afford it. Those people in their 40,50,60s at your BB probably haven't been there that long and probably get about the same salary as everybody else.

But again not trying to pick a fight at all. Just making a point.

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How can you compare Starbucks to a Electronics store though? It doesn't take a rocket scientist to make a cup of coffee...

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They don't have the nickname "Short Circuit" for nothing. Their customer service has always been way below par, their prices are outrageous usually, and their selections have always sucked.

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