Speaker 1: Get in touch with technology with tech Stuff from how
Speaker 1: stuff works dot com. Hey there, and welcome to tech Stuff.
Speaker 1: I'm your host, Jonathan Strickland, senior writer at how stuff
Speaker 1: works dot com. And today we're going to continue the
Speaker 1: story we began in our last episode about the electronics
Speaker 1: retail company Circuit City. Now, in our last episode, I
Speaker 1: covered how Samuel Wertzel and Abraham Haste founded the Wards
Speaker 1: Company back in nineteen forty nine, which would grow and
Speaker 1: evolve and eventually become circuit City. I left off in
Speaker 1: nineteen eighty four. That was the year that they officially
Speaker 1: adopted Circuit City as the name of the overall company,
Speaker 1: and Samuel Wertzel had retired and his son, Alan Wortzel
Speaker 1: had become president and CEO of the company. So in night,
Speaker 1: Alan Wortzel really concentrated on implementing a new plan based
Speaker 1: off the success of the Circuit City superstore concept that
Speaker 1: originally was just called the Wards loading Dock. Now, that
Speaker 1: plan involved creating an almost cookie cutter approach to store space,
Speaker 1: and if you've ever been to more than one Circuit
Speaker 1: City during its heyday, you probably noticed the layout was
Speaker 1: remarkably similar um probably almost identical and that was by design.
Speaker 1: Wortzel my experiment with changes at one location, just to
Speaker 1: see how they would do, and then perhaps implement some
Speaker 1: changes across the board, but by and large they remained
Speaker 1: almost identical. Now, the store layout embodied some of the
Speaker 1: same sales philosophies that Samuel had established back when he
Speaker 1: had first started the Wards company. You might remember in
Speaker 1: that last episode I talked about how he used various
Speaker 1: manipulation techniques to increase sales, not in a way to
Speaker 1: be dishonest or to uh, you know, otherwise trick a
Speaker 1: customer into buying something, but rather to entice a customer
Speaker 1: into spending as much money as possible. There's a fine
Speaker 1: line there between an admirable work ethic and kind of
Speaker 1: creepy manipulation. And he walked it carefully, or at least
Speaker 1: appeared to well. Alan wanted to do the same thing,
Speaker 1: and he incorporated that into the store design itself. This
Speaker 1: is gonna sound really familiar to anyone who's been to
Speaker 1: a big box store, because now it is standard practice.
Speaker 1: What they would do is they would put all the
Speaker 1: popular brands, all the big ticket items that people were
Speaker 1: really interested in in the back of the store. That
Speaker 1: meant that customers would have to walk through the rest
Speaker 1: of the store in order to get there, and they
Speaker 1: would see lots of other stuff on the way. So
Speaker 1: this was an effort to try and boost sales of
Speaker 1: slightly less popular items by having people walk through. You
Speaker 1: see the same thing today, like most electronics departments in
Speaker 1: a lot of stores are towards the back or somewhere
Speaker 1: deep in the middle of the store, and it means
Speaker 1: you have to walk through other departments to get there.
Speaker 1: And as you're doing that, you're thinking, all right, I
Speaker 1: do need to buy a new two piece bathing suit
Speaker 1: or something similar. I mean, I think that way too
Speaker 1: frequently anyway. The late seventies and early eighties marked a
Speaker 1: new age in consumer electronics, and Circuit City was benefiting
Speaker 1: from that. When it started off as just a television
Speaker 1: appliance and radio business. Suddenly those store shelves got way
Speaker 1: more crowded with other stuff. New gadgets were joining them.
Speaker 1: You had VCRs and both the vhs and the Beta
Speaker 1: Max formats. You had laser disc players, you had cassette players,
Speaker 1: record players. Later on you would have CD players. You
Speaker 1: had cordless phones, microwave ovens, much much later, like in
Speaker 1: the late nineties, DVD players would join that. So this
Speaker 1: succession of new products ended up giving Circuit City the
Speaker 1: base to succeed. And because the superstores were so large,
Speaker 1: they could carry a wide variety of products all in
Speaker 1: one location, and the storage space, the warehouse space in
Speaker 1: the back of the store was big enough to allow
Speaker 1: the stores to purchase items from vendors in large amounts
Speaker 1: in bulk essentially, and that lowered the cost of purchase,
Speaker 1: and then that meant they could maximize their profit margins
Speaker 1: when they sold it at a higher price to the
Speaker 1: customer when they made that sale. Now, Wurtzel led the
Speaker 1: company into an intense phase of expansion. Circuit City began
Speaker 1: to move into new markets like Atlanta and Florida. The
Speaker 1: company would open numerous stores in a relatively small region,
Speaker 1: so they'd open maybe five or six stores in a
Speaker 1: metropolitan area. This accomplished a few goals, all of which
Speaker 1: were benefiting the company and a few were benefiting the consumer.
Speaker 1: For one, adding lots of stores in the city meant
Speaker 1: customers wouldn't necessarily have to travel so far to get
Speaker 1: to a specific store. You know, if there's just one
Speaker 1: location in the city, you have to travel to that location,
Speaker 1: no matter where you may be. If there are multiple locations,
Speaker 1: you have some choices. That being said, Circuit City had
Speaker 1: made it a practice to purchase cheap land, so they
Speaker 1: were mainly looking at places that weren't necessarily in the
Speaker 1: most populated or convenient spots. That was another reason to
Speaker 1: open several stores. It helped balance that because customers would
Speaker 1: still have to travel a bit. They the stores didn't
Speaker 1: tend to be in areas that were convenient to residential
Speaker 1: areas for example. Now it also meant that they didn't
Speaker 1: have to spend as much money promoting and advertising any
Speaker 1: individual store because they could group stores together in a
Speaker 1: single advertising campaign for whatever city it might be, and
Speaker 1: all the stores would benefit from this, and that ended
Speaker 1: up being a kind of a money saving effort for
Speaker 1: the company and cutting costs. And this was all new
Speaker 1: back then. It's something that we see a lot of today,
Speaker 1: or at least we have seen a lot of today.
Speaker 1: You might argue, we don't see it as much, mainly
Speaker 1: because of the move to online market places. We'll talk
Speaker 1: more about that a little bit later in this episode.
Speaker 1: So they were keeping the company's bottom line healthy by
Speaker 1: managing these costs by consolidating costs and by maximizing the
Speaker 1: amount of exposure they were getting to customers. But some
Speaker 1: sad stuff was happening to around this time in the
Speaker 1: co founders of the Wards Company, the company that became
Speaker 1: Circuit City, Samuel Wurtzel and Abraham Has. Both of them
Speaker 1: passed away that year. They lived long enough to see
Speaker 1: this little humble TV retail shop they had opened way
Speaker 1: back in n grow into a substantial chain of elect
Speaker 1: ronic superstores that were in multiple states across the US,
Speaker 1: But then they both passed away in nineteen eighty five.
Speaker 1: In nineteen eighty six, Alan Wertzel retired as CEO of
Speaker 1: Circuit City. Now he would remain on the board of
Speaker 1: directors until two thousand one, so he was still active
Speaker 1: with the company. He just wasn't acting as CEO anymore.
Speaker 1: At the time of his retirement, the chain included nineties
Speaker 1: stores and sales were hovering around the one billion dollar mark.
Speaker 1: In fact, from nineteen eighty three to ninety seven, Circuit
Speaker 1: City had the best return on investments on the New
Speaker 1: York Stock Exchange, meaning if you invested money in Circuit City.
Speaker 1: In nineteen eighty three, your return was better than any
Speaker 1: other investment you could have made that year, and it
Speaker 1: remained so for the next four years, and even since
Speaker 1: nineteen sixty five. It had been listed on the Fortune
Speaker 1: five hundred list of companies nineteen sixty five on. It
Speaker 1: consistently made that list and would continue to do so
Speaker 1: up until But that gets a little bit ahead of
Speaker 1: where we want to be right now. I'll get into
Speaker 1: more of the troubles that led to the fall from
Speaker 1: Grace in a bit now. Alan Wurtzel's successor was a
Speaker 1: man named Richard Sharp, and in the last episode I
Speaker 1: mentioned that Sharp had been hired on at an executive
Speaker 1: vice president level outside the company, so that was kind
Speaker 1: of counter to some of the company's core values, which
Speaker 1: included promoting from within. Instead of promoting from within, They
Speaker 1: found this very intelligent, capable hardware and software guy and
Speaker 1: brought him on. His performance was impressive. He had designed
Speaker 1: a computer system for Circuit City that made operations much
Speaker 1: more efficient and effective, and when he stepped in as
Speaker 1: president and CEO of Circuit City, the company was on
Speaker 1: the rise. He would end up pushing it farther, going
Speaker 1: into the stratosphere. Though a lot of people have argued
Speaker 1: later on that it might have been his leadership that
Speaker 1: ultimately set the company on the path to self destruction.
Speaker 1: I'll let you guys kind of decide what you think
Speaker 1: once we get to this the end of this episode.
Speaker 1: I'm not entirely sold on the idea that Sharp was
Speaker 1: the beginning of the end. I think he made some
Speaker 1: decisions that were ultimately poor ones, but I don't know
Speaker 1: that they were ones that Circuit City couldn't have rebounded from.
Speaker 1: And uh so we'll get into that a little bit.
Speaker 1: Let's talk about who he was first. So Richard Rick
Speaker 1: Sharp was born on April twelfth, nineteen forty seven, just
Speaker 1: two years before Samuel Wertzel founded the company that would
Speaker 1: become Circuit City. He grew up in the Washington, D c.
Speaker 1: Area and attended George Washington High School and Alexandria, Virginia.
Speaker 1: He first went to college to study electrical engineering at
Speaker 1: the University of Virginia, but discovered that that really wasn't
Speaker 1: his cup of tea. He wasn't so much interested in
Speaker 1: electrical engineering as he was in computer science, so he
Speaker 1: dropped out of college and for a short while he
Speaker 1: pursued some slightly less academic interests like playing poker and
Speaker 1: shooting pool. Um I usually do the opposite, shooting poker,
Speaker 1: however terrible. I don't recommend it. He wasn't idle for
Speaker 1: long and soon he was attending the College of William
Speaker 1: and Mary studying computer science and then went on to
Speaker 1: attend the Harvard Business Schools Management program. When he was
Speaker 1: twenty seven years old, he founded a hardware and software
Speaker 1: business development company, and he was really good at what
Speaker 1: he did. He impressed the folks at Circuit City, which
Speaker 1: is why they hired him on at that executive vice
Speaker 1: president level. He joined in nineteen two, and just four
Speaker 1: years later he became the leader of the company. By
Speaker 1: n he became the chairman of the board. Now, while
Speaker 1: the company was opening new locations in Georgia and Florida,
Speaker 1: it also was working towards eliminating unnecessary drains on profits. Now,
Speaker 1: among those drains were of those Lafayette stores I mentioned
Speaker 1: in the previous podcast. These were the stores located in
Speaker 1: the New York area and originally they had sold stereo equipment.
Speaker 1: When Circuit City, back then the Wards Company, purchased those stores,
Speaker 1: there were only eight by they had fifteen, but they
Speaker 1: weren't performing well. They were unprofitable, so the company shut
Speaker 1: down the stores and they would continue having trouble penetrating
Speaker 1: the New York market because the New York market was
Speaker 1: already saturated with lots of stores that would engage in
Speaker 1: price slashing. That was not really a model that Circuit
Speaker 1: City was suited for. Circuit City was still using commission sales,
Speaker 1: and the commission sales depended upon sales people trying to
Speaker 1: sell products at the highest price they could. Doesn't really
Speaker 1: work for price slashing, So the Circuit City experience was
Speaker 1: supposed to be haggle free, but you could often argued
Speaker 1: down a salesperson from the price that was on the ticket,
Speaker 1: at least in the old Wards Company days, and Circuit
Speaker 1: City just couldn't survive in the market where other business
Speaker 1: owners were regularly cutting prices in order to compete for customers. Also,
Speaker 1: in nineteen six, Circuit City shut down one other relationship
Speaker 1: it had earlier established, that would be the discount store
Speaker 1: in California called Zods. I mentioned them in the last
Speaker 1: episode two uh they At that point, Circuit City had
Speaker 1: been operating four different lines of stores. You had the superstores,
Speaker 1: you had the smaller Circuit City stores, you had Zodis
Speaker 1: and you had the Lafayette stores. By getting rid of
Speaker 1: the Lafayette and Zodis, they were able to consolidate Circuit
Speaker 1: Cities strategy and simplify matters. From a managerial standpoint, The
Speaker 1: money the company reclaimed from operating those businesses could be
Speaker 1: reinvested by opening more superstores in California and the southeastern
Speaker 1: United States in nine seven and eighty eight. The company
Speaker 1: prospered and grew, and it was fueled by this demand
Speaker 1: for consumer electronics like the VCR, which by that time
Speaker 1: was viewed as a standard component in your typical home
Speaker 1: theater system. Sales grew over one billion dollars a year
Speaker 1: and the number of stores increased to one hundred fifty.
Speaker 1: Circuit City had already experimented with mall store fronts in
Speaker 1: the past and decided to try and give it another
Speaker 1: shot with a new idea new brand. This time. The
Speaker 1: company planned to open twenties stores, and they branded them Impulse.
Speaker 1: And I think that's a pretty clever name for a
Speaker 1: store that specialized in selling small electronic devices, particularly the
Speaker 1: kind you might purchase as a gift or a stocking stuffer.
Speaker 1: It's the very definition of an impulse by Now, whether
Speaker 1: the executives at Circuit City intended that meaning to be
Speaker 1: part of the name or not, it definitely was the
Speaker 1: foundation for their sales strategy and it worked and a
Speaker 1: few years later the company made plans to open dozens
Speaker 1: of other stores and malls within their territory. That's good
Speaker 1: to mention that more than a billion dollars in sales
Speaker 1: is not the same thing as a billion dollars in profits.
Speaker 1: Profits are what you get when you deduct your costs
Speaker 1: from your revenue. Now, Circuit Cities profits by nine, we're
Speaker 1: just under seventy million dollars. Not still a heck of
Speaker 1: a lot of money, but it shows how much work
Speaker 1: the company had to do in order to make that
Speaker 1: kind of profit. A billion dollars in sales for seventy
Speaker 1: million dollars in profit. Also, the company managed to do
Speaker 1: this while there was another economic recession and effect. So
Speaker 1: how did it do that? Well? Mainly their success hinged
Speaker 1: on new consumer electronic products coming out. So, as you
Speaker 1: guys are probably aware, I've been going to c e
Speaker 1: S also formally known as the Consumer Electronics Show every
Speaker 1: year in Las Vegas, Nevada Since two thousand eight, Circuit
Speaker 1: City would be a company that would pay very close
Speaker 1: attention to trade shows like c s. The company depended
Speaker 1: upon new compelling products to come out so that they
Speaker 1: could offer them in their retail stores. In fact, stores
Speaker 1: like Circuit City are why those trade shows ex cist.
Speaker 1: Now sometimes we in the tech media I include myself here,
Speaker 1: we forget this as we walk around waiting to be
Speaker 1: blown away by a groundbreaking product or a new category
Speaker 1: defining technology. But the real reason those trade shows exist
Speaker 1: is to let retailers get a look at the products
Speaker 1: that will soon be available for customers so that they
Speaker 1: can create a sales strategy for the near future and
Speaker 1: figure out which products they want to carry in their stores.
Speaker 1: That's the real reason for those trade shows. The press
Speaker 1: is presence is really just icing on the cake. Who
Speaker 1: has the stuff we report on ends up being advertising
Speaker 1: for both the companies making the cool products and the
Speaker 1: ones that are going to end up selling them. Back
Speaker 1: in the eighties and nineties, those retail establishments were primarily
Speaker 1: superstores like Circuit City, So in many ways, circuit cities
Speaker 1: booming years can be attributed to advances in consumer electronics
Speaker 1: from the migration of cassette players to CD players to
Speaker 1: the similar trend of VCRs to DVD players much later.
Speaker 1: Circuit City also got into the personal computer retail business,
Speaker 1: beginning in nineteen eighty nine. Now by the company's sales
Speaker 1: had hit two billion dollars, Circuit City began opening smaller
Speaker 1: stores and markets that seemed to be too small to
Speaker 1: support a full superstore, and a few years later the
Speaker 1: company introduced a new department in superstores that sold music
Speaker 1: like actual albums as opposed to just the the equipment
Speaker 1: that plays music. This was a move that put a
Speaker 1: ton of pressure on smaller independent music stores and music chains.
Speaker 1: I remember a lot of those, both the chains and
Speaker 1: the independent businesses that used to specialize in selling music.
Speaker 1: In my neck of the woods, we had a regional
Speaker 1: chain called Turtles Records and Tapes. I remember fondly going
Speaker 1: into Turtles because that was where not only would you
Speaker 1: buy albums, you could purchase tickets to concerts there. And
Speaker 1: then there were the truly independent mom and pop shops.
Speaker 1: Turtles was still a chain, but there were lots of
Speaker 1: independence stores too, and all of these were pressured by
Speaker 1: the superstore movement into their territory. Now that we've crept
Speaker 1: up into the early nineties, it's a good time to
Speaker 1: talk about some of the competitors that rose up to
Speaker 1: face Circuit City. But first, let's take a quick break
Speaker 1: to thank our sponsor. Okay, you can't really talk about
Speaker 1: Circuit City without mentioning their chief competitor, which I would
Speaker 1: argue was Best Buy. I could do a full episode
Speaker 1: on the best Buy story, but let me give you
Speaker 1: the cliffs Notes version. Do they even still have cliffs Notes?
Speaker 1: Do you guys get that reference? Well, anyway, here's a
Speaker 1: summary to tide us over. Best Buy began as a
Speaker 1: chain of music stores in Minnesota in nineteen sixty six
Speaker 1: that was founded by a man named Richard Schulz and
Speaker 1: a d Really. The store was called Sound of Music.
Speaker 1: I don't know if the Hills are alive in Minnesota,
Speaker 1: but they did have the Sound of Music stores in
Speaker 1: One of those stores was damaged in a tornado. The
Speaker 1: store held a special tornado sale and they called it
Speaker 1: a best Buy sale. Uh. The event was so successful
Speaker 1: the company decided to hold one every year. Um that
Speaker 1: being a special sale, not holding a tornado. The company
Speaker 1: didn't schedule tornadoes. I don't think you would want to.
Speaker 1: Those things are terrible, but the sales went over like gangbusters. Eventually,
Speaker 1: the company changed its name to best Buy, the same
Speaker 1: name as those sales that made it famous, and that
Speaker 1: made more sense than Sound of Music anyway, because by
Speaker 1: that time the stores were also beginning to carry lots
Speaker 1: of unrelated stuff, things that had nothing to do with
Speaker 1: audio or music. Throughout the eighties, best Buy began to grow,
Speaker 1: and by the early nineties it had expanded into a
Speaker 1: national chain. Circuit Cities Will dominated the market at that time,
Speaker 1: and it seemed like no one at the company really
Speaker 1: took best Buy seriously. In fact, Alan Wurtzel said that
Speaker 1: at that time, no one at Circuit City really considered
Speaker 1: any competition as being anything more than just an annoyance.
Speaker 1: Now you could call that hubrists or arrogance, but at
Speaker 1: the time it seemed like Circuit City was firmly on
Speaker 1: the prosperity highway and hindsight is best Buy meanwhile, benefited
Speaker 1: from Circuit City success because Best Buy executives were able
Speaker 1: to learn from the path that was forged by Circuit City.
Speaker 1: They could employ the most successful strategies and avoid the
Speaker 1: pitfalls that Circuit City had identified during its growth phase.
Speaker 1: Because Circuit City was sort of the pioneer, best By
Speaker 1: following behind could say, oh, well, we want to go
Speaker 1: this way, but we won't make the same mistake that
Speaker 1: they did. We can avoid that, save money, and expand faster.
Speaker 1: So it gave best Buy a chance to catch up
Speaker 1: quickly to Circuit City. With companies like best By biting
Speaker 1: at circuit Cities heels, the company became motivated to get
Speaker 1: into the price slashing business in order to stay competitive. Now,
Speaker 1: at this point, Circuit City was still in the lead,
Speaker 1: and Richard Sharp had decided that the company should diversify
Speaker 1: what it offered. What if the company could sell used cars. Well,
Speaker 1: that's a step too far for just a Circuit City brand,
Speaker 1: but it provided the inspiration for Sharp to guide Circuit
Speaker 1: City into launching a new company that was a subsidiary
Speaker 1: and its specialized in selling used cars. And I bet
Speaker 1: you've heard of it, because in September three, the first
Speaker 1: CarMax location opened in Richmond, Virginia. And yes, CarMax originated
Speaker 1: as a Circuit City company. And while Circuit City would
Speaker 1: eventually die in two thousand nine, spoiler alert, car Max
Speaker 1: is still around, but in those early years, CarMax had
Speaker 1: a rough start, and since Circuit City had a stake
Speaker 1: in the company, it also hit Circuit City pretty hard.
Speaker 1: Also launching CarMax wasn't going to stave off those competitors
Speaker 1: like Best Buy. To do that, Circuit City stores began
Speaker 1: to engage in that price slashing, at least in the
Speaker 1: markets where Best Buy stores were trying to get a foothold.
Speaker 1: So if you happen to live in a city that
Speaker 1: had both Best Buy stores and Circuit City stores, you
Speaker 1: benefited from this because you could get a better bargain
Speaker 1: for your product if you shopped at Circuit City. But
Speaker 1: if you lived in a place where only Circuit City existed,
Speaker 1: you didn't see that benefit because there was no need
Speaker 1: for them to slash prices. Best Buy wasn't there to
Speaker 1: to siphon off any of the business. The two companies
Speaker 1: had very different sales strategies. At Best Buy, employees were
Speaker 1: trained to be able to answer basic customer questions and
Speaker 1: assist when necessary, but largely customers had kind of a
Speaker 1: help yourself approach, like walk into a store, see the
Speaker 1: thing they wanted to buy, put it in a cart,
Speaker 1: and go to check out. That's all it would work.
Speaker 1: At best Buy. You might get asked by an employee
Speaker 1: if there's anything he or she could do to help
Speaker 1: you find, but that would be about it until you
Speaker 1: made your purchase. But over at Circuit City, salespeople were
Speaker 1: still working on commission, so the experience was very different.
Speaker 1: You walk into a circuit City, you would see demonstration
Speaker 1: models of various products, but for the most part, you
Speaker 1: couldn't pick anything up. Everything was in boxes in the
Speaker 1: warehouse and you would talk to a salesperson who would
Speaker 1: make a sale established whatever the price was that you're paying.
Speaker 1: Then they would go into the back and get the
Speaker 1: thing that you were interested in buying, bring it out
Speaker 1: to you, and then you would go and purchase it.
Speaker 1: So very different models, and it meant that over at
Speaker 1: Circuit City, a salesperson made more money if they made
Speaker 1: more sales. They had an incentive to sell more to
Speaker 1: more customers, and best Buy that wasn't the case. People
Speaker 1: were on an hourly wage, no commissions, so the customer
Speaker 1: experience at Circuit City was very different from Best Buy.
Speaker 1: If you walk into a circuit City and you encountered
Speaker 1: a salesperson who didn't have a particularly subtle approach. You
Speaker 1: might feel pressured when shopping for electronics, which a lot
Speaker 1: of folks react negatively toward. Circuit City executives felt that
Speaker 1: their approach was actually the best one, which is why
Speaker 1: they stuck with it for so long. It motivated their
Speaker 1: sales force and it drove revenue because salespeople were selling
Speaker 1: those higher margin products, the things that cost more money
Speaker 1: and you would make more profit from because the cost
Speaker 1: to the consumer was much higher than what it cost
Speaker 1: Circuit City to purchase from a vendor. The company at
Speaker 1: that point was valued at more than a billion dollars,
Speaker 1: and they continued to grow and open up news superstores
Speaker 1: in various markets. Meanwhile, best Buy was starting to gain ground,
Speaker 1: and by it was competing with Circuit City and about
Speaker 1: half of the larger company's markets. So half the stores
Speaker 1: that Circuit City owned were competing with best Buy. The
Speaker 1: other half were in markets that best Buy had not
Speaker 1: quite penetrated yet. Best Buy was also taking a different
Speaker 1: strategy when choosing store locations. So you remember I mentioned
Speaker 1: that those Circuit City superstores were located on cheap land,
Speaker 1: which wasn't always convenient to local populations. They could be
Speaker 1: really out of the way. Best Buy tried to avoid
Speaker 1: that same problem and find areas close to population centers
Speaker 1: and pay that higher upfront cost because it was access
Speaker 1: to more customers and people. They did figure that people
Speaker 1: would be more willing to go to a store that's
Speaker 1: closer to their home rather than travel across town to
Speaker 1: go to a competitors superstore. Other stores besides best Buy
Speaker 1: were also pushing up against the giant, which created a
Speaker 1: much more competitive environment for Circuit City. Still, at that point,
Speaker 1: the company was really doing great. It hits seven billion
Speaker 1: dollars in sales in with earnings at a twenty percent
Speaker 1: growth rate. It seemed like the company was unstoppable. It
Speaker 1: was too big to fail. Accept it totally wasn't Bump
Speaker 1: Bump Bomb really is the turning point year. That's the
Speaker 1: year where we see Circuit City doing incredibly well, and
Speaker 1: afterward we start to see it falter in best Buy
Speaker 1: sales officially outperformed Circuit City sales. Now Circuit City was
Speaker 1: still doing well, just not as well as the company
Speaker 1: had been doing in previous years. This would become a
Speaker 1: familiar story over the next few years. The company continued
Speaker 1: to see earnings grow, but they were growing by smaller
Speaker 1: amounts with occasional rallies over the next few years. So
Speaker 1: you might say in one year they'd see twenty percent growth,
Speaker 1: the next year they might see fifteen percent growth, the
Speaker 1: next year might be seven percent growth, and they're like
Speaker 1: I said, there were a couple of rallies. But seeing
Speaker 1: the growth slow like that is terrifying to companies, particularly
Speaker 1: publicly traded companies, because shareholders expect a return on their investment. Now,
Speaker 1: that continued to go until about two thousand two, when
Speaker 1: the company had what folks in the industry referred to
Speaker 1: as negative growth, which means the company lost money. It
Speaker 1: didn't grow at all. It actually shrank a bit. It
Speaker 1: was only a tiny amount. It was point seven percent
Speaker 1: negative growth, but that is a terrible sign. Best Buy, meanwhile,
Speaker 1: had experienced a pretty wild growth rate over that same
Speaker 1: period of time, but it was always in the positive space.
Speaker 1: So some years it was growing a lot, some years
Speaker 1: it wasn't growing as much, but it was always positive.
Speaker 1: And part of the reason that it's kind of a
Speaker 1: zigzag wild ride for best Buy was that the company
Speaker 1: was ramping up the number of stores it opened, where
Speaker 1: a circuit city was already pretty well entrenched. Meanwhile, another
Speaker 1: store was starting to pinch at Circuit Cities performance, and
Speaker 1: this time it was Walmart. In the mid two thousand's,
Speaker 1: Walmart redesigned its stores and product lines to include more electronics,
Speaker 1: including high end brands like Sony. Now that put Walmart
Speaker 1: in competition with Circuit City. Walmart was able to do
Speaker 1: some serious damage by offering something that I think we
Speaker 1: all have had experience in. Uh it is the bane
Speaker 1: of my existence when I go into a brick and
Speaker 1: mortar store, and that is the up cell with extended warranties.
Speaker 1: Extended warranties are profit machines. It is a way for
Speaker 1: a company to make crazy amounts of money for relatively
Speaker 1: little investment. And Walmart was really putting the hurt on
Speaker 1: Circuit City and Best Buy by offering these extended warranties
Speaker 1: at a much lower cost than you would find at
Speaker 1: the other stores. And like I said, they were almost
Speaker 1: pure profit for stores. In fact, extended warranties accounted for
Speaker 1: all of the operating profit for Circuit City in two
Speaker 1: thousand five, and a third of the profit for Best
Speaker 1: Buy that same year. So Walmart's moved to undercut warranty
Speaker 1: prices was a shot right across the bow at the
Speaker 1: electronics super doors, and it was an effective one. According
Speaker 1: to a retailing analyst named Todd Kurt, a tiny drop
Speaker 1: in warranty revenue would result in a massive drop in
Speaker 1: operating profit for Circuit City. And when I say massive,
Speaker 1: I'm talking about if you drop one percentage point decrease
Speaker 1: in extended warranty revenue, it would end up having a
Speaker 1: twenty nine decrease in operating profit. Han Circuit City saw
Speaker 1: a five decrease in warranty revenue that year. Huge impact.
Speaker 1: And when you see that your business is so heavily
Speaker 1: dependent upon a single point like that, you start getting
Speaker 1: awfully nervous. So Richard Sharp started looking into ways that
Speaker 1: he could possibly turn this around, and he thought that
Speaker 1: maybe diversifying Circuit Cities products was a potential answer. He
Speaker 1: did this in a couple of different ways. He did
Speaker 1: some home security stuff that didn't work out. But the
Speaker 1: real big one that people like to point to as
Speaker 1: being a huge misfire happened in that's when the company
Speaker 1: would end up carrying a new product called Divis d
Speaker 1: i v X, which is a type of digital movie
Speaker 1: disc and it was sort of like a disposable DVD,
Speaker 1: although those were two different standards at that time. The
Speaker 1: disc could store encoded digital video, but you had to
Speaker 1: watch the disc within forty eight hours of purchase or
Speaker 1: you lost your chance. So this was kind of a
Speaker 1: move to get into the video rental business. Circuit. City
Speaker 1: is kind of moving into blockbuster territory with this, but
Speaker 1: there was no risk of someone running off with a
Speaker 1: copy of a film. You would just produce the Divics disc,
Speaker 1: sell it to a consumer, and then they would have
Speaker 1: two days to watch it. Dvick's players had a phone
Speaker 1: connection that had to be active for the video to play.
Speaker 1: So anyone who's used to computer games that have an
Speaker 1: online component requirement, even if it's just a single player game,
Speaker 1: you know what I'm talking about. This is digital rights management, right.
Speaker 1: It's the attempt to make sure that the use of
Speaker 1: the product falls within certain parameters. In this case, you
Speaker 1: have forty eight hours to watch your movie. A central
Speaker 1: computer system kept track of everything, even unplayed movies, which
Speaker 1: drives me crazy. Is amazing that this ever was considered
Speaker 1: a good idea. Let's say that you wanted to rent
Speaker 1: a movie, so you hit your local circuit city and
Speaker 1: buy a Divix disc and bye bye bye. I mean,
Speaker 1: you're really just renting the chance to watch a movie
Speaker 1: for forty eight hours. So let's pick a specific film.
Speaker 1: I'm gonna pick your favorite film, which we all know
Speaker 1: is Big Trouble in Little China, classic movie starring Kurt Russell,
Speaker 1: directed by John Carpenter. You have great taste, fantastic favorite film.
Speaker 1: Good on you. You pay a few bucks, maybe four
Speaker 1: or five dollars, and because this is a rental, you
Speaker 1: don't have to pay more than that. You know you're
Speaker 1: not buying the movie. You take the disc homeb but
Speaker 1: you're a busy person. It turns out you don't have
Speaker 1: time to enjoy that film within those first forty eight hours. Well,
Speaker 1: that central computing system knows this. It's tracking it because
Speaker 1: your Divics system hasn't called in to say, hey, this
Speaker 1: guy's watching Big Trouble Little China, or this lady is
Speaker 1: watching Big Trouble and Little China, or this family isn't
Speaker 1: watching Big Trouble in Little China. And forty eight hours
Speaker 1: have passed, and since you didn't have the decency to
Speaker 1: watch it when you were supposed to, your build another
Speaker 1: three dollars. Isn't that crazy? You were charged for not
Speaker 1: watching the movie you rented. You you go, you rent
Speaker 1: a movie, You're not supposed to return the disk. You
Speaker 1: throw it away after you use it, forty eight hours passes,
Speaker 1: you get dinged for not watching the movie. It's like
Speaker 1: a late fee for a movie you don't have to return. Yeah,
Speaker 1: I can't imagine why that standard lost out to DVD,
Speaker 1: so I'm sure you're familiar with the DVD format. I'll
Speaker 1: probably do a full episode more about DVDs and encoding
Speaker 1: and also if you say the word DVD fast enough,
Speaker 1: you sound like you're Twiggy from Buck Rogers. But it
Speaker 1: was early days for both of those standards back in
Speaker 1: and Circuit City had gone all in on the DVICS bet,
Speaker 1: but other retailers weren't so excited about that technology, which
Speaker 1: meant that Circuit City had to work extra hard to
Speaker 1: educate customers and convince them that the Divics format was
Speaker 1: the way to go, and that was a tough job.
Speaker 1: They tried to convince studios to create exclusives, stuff that
Speaker 1: would only come out on Divics and not on DVD,
Speaker 1: but with very little success, and in nine sharp knew
Speaker 1: that this was a bad idea, and he pulled the
Speaker 1: plug on the whole project. Now, the price tag for
Speaker 1: that mistake was about two hundred thirty three million dollars
Speaker 1: for the development and promotion of dvids, not good news.
Speaker 1: In two thousand Sharp transitioned from president and CEO to chairman. Now,
Speaker 1: like I said earlier, Sharp's tenure included high highs and
Speaker 1: low lows for Circuit City, and some things like the
Speaker 1: Rabbid expansion in the late eighties and early nineties had
Speaker 1: really paid off, but others like the Divics debacle and
Speaker 1: a similar misstep with the home security sales and installation
Speaker 1: were big misses. At that point, Alan McCullough, who had
Speaker 1: previously been the president and CEO of Circuit City, became
Speaker 1: the new president and CEO. Two years later, mccullo would
Speaker 1: take over the title of chairman from Sharp, and from
Speaker 1: two thousand two to two thousand five he would be
Speaker 1: the head guy in charge. I got a lot more
Speaker 1: to say about that, but let's take another quick break
Speaker 1: to thank our sponsor. All Right, we're heading towards the
Speaker 1: slide into bankruptcy here, but first let's talk a bit
Speaker 1: about McCullough. He had worked with Circuit City since nineteen seven,
Speaker 1: so he had been there for a while. He was
Speaker 1: invested in the company, at least professionally invested, if not
Speaker 1: financially invested, and his tenure began with a big change
Speaker 1: in Circuit City strategy. His tenure as the president, that is,
Speaker 1: president CEO, the company said it would no longer sell appliances.
Speaker 1: It would focus only on consumer electronics and get out
Speaker 1: of the appliance game. The appliance market, like consumer electronics,
Speaker 1: had become much more competitive over the past few years.
Speaker 1: It was largely due to big stores like Home Depot
Speaker 1: and Lows offering major appliances. Getting out of the business
Speaker 1: was thought of as a way to cut costs and
Speaker 1: to focus on consumer electronics more exclusively so that it
Speaker 1: could be more effective. Appliances also take up a lot
Speaker 1: of space when you're trying to sell them, so by
Speaker 1: getting out of that business, the company wouldn't need to
Speaker 1: maintain as much warehouse space, and it would also cut
Speaker 1: down on delivery costs. So the whole idea was we
Speaker 1: can save a lot of money this way. But getting
Speaker 1: out of the appliance game also meant that suddenly some
Speaker 1: jobs weren't needed, like a whole lot of them, like
Speaker 1: a thousand jobs. Circuit City close six distribution centers as well,
Speaker 1: and the decision was made so quickly that it ended
Speaker 1: up causing huge problems for Circuit City because the vendors
Speaker 1: that Circuit City worked with, the companies that made the
Speaker 1: products that Circuit City sold in their stores, weren't informed
Speaker 1: of the decision in advance, so it damaged a lot
Speaker 1: of business relationships. And it also meant that anyone in
Speaker 1: the market for appliances wasn't going to go to Circuit City,
Speaker 1: so that resulted in less customer traffic in stores, and
Speaker 1: that ended up hurting. And while the the business was
Speaker 1: operating at a loss for the appliances section it the
Speaker 1: sales still went to help cover fixed costs, and now
Speaker 1: you didn't have those anymore, so that money had to
Speaker 1: be taken from other places. McCullough would also officially spin
Speaker 1: off CarMax into its own company. CarMax at that point
Speaker 1: was facing competition in the used car market space, and
Speaker 1: it had been a drain on Circuit Cities financials. It
Speaker 1: had a rough several you know, rough early times for
Speaker 1: CarMax Circuit City tried to remodel stores in an effort
Speaker 1: to make them more attractive to customers. The company had
Speaker 1: long been focused on the practice of scooping up that
Speaker 1: cheap property for its superstores, but again it meant that
Speaker 1: most of those stores weren't convenient to customers, and Best Buy,
Speaker 1: like I had mentioned, had gone a totally different way,
Speaker 1: spending that upfront cost to get those premium locations. Now,
Speaker 1: Circuit City couldn't just relocate stores, so their next choice
Speaker 1: was to remodel and redesign store spaces to entice customers inside.
Speaker 1: So the idea would be that now customers could come
Speaker 1: in and purchase a lot of the products just by
Speaker 1: picking up a box and taking it to check out.
Speaker 1: They wouldn't have to talk to a salesperson. But they
Speaker 1: were still running the sales on commission at this point,
Speaker 1: so a lot of products didn't fall into that category.
Speaker 1: If you wanted one, you still had to talk to
Speaker 1: a salesperson. They still had to send someone to the
Speaker 1: back to get the product to come out to you.
Speaker 1: Only a few of the products were kind of a
Speaker 1: help yourself approach, so it was sort of a half measure. Uh,
Speaker 1: and you might imagine that it wasn't terribly effective, and
Speaker 1: you'd be right now. The remodeling strategy was scaled back
Speaker 1: from their original plans almost from the beginning in two
Speaker 1: thousand one. They initially said we're going to remodel stores,
Speaker 1: but they only really remodeled about twenty or so, and
Speaker 1: the reason for that was to save money on the
Speaker 1: costs that remodeling would incur. It was about a million
Speaker 1: dollars per store to remodel them. So they thought, well, well,
Speaker 1: we'll spread out the costs of remodeling by doing blocks
Speaker 1: of stores each year. But the problem was doing this
Speaker 1: meant that the stores were falling further behind their competitors.
Speaker 1: It was putting them in a more dangerous position. In
Speaker 1: two thousand three, responding to changes in the market that
Speaker 1: had happened years earlier, Circuit City finally ended its commissioned
Speaker 1: sales program. Instead, all employees would get a fixed hourly
Speaker 1: pay rate based upon their pay grade. It also meant
Speaker 1: cutting nearly four thousand jobs all in sales. Four thousand
Speaker 1: people having their jobs cut because this decision no longer
Speaker 1: did Circuit City need salespeople who specialized in commencing customers
Speaker 1: to buy the highest step up on a product they
Speaker 1: could manage. Instead, hourly wage employees would provide general assistance,
Speaker 1: similar to the way business was done in shops like
Speaker 1: Best Buy. Now. If Circuit City had made this change
Speaker 1: back in the nineties, it might have worked, though it
Speaker 1: still would have obviously been painful for the people who
Speaker 1: were in sales, But by this point, when the company
Speaker 1: was already in dire straits, when it was struggling, it
Speaker 1: meant seeing a decrease in those higher margin sales and
Speaker 1: further negative impact on revenue, which wasn't something they could
Speaker 1: easily bounce back from at this point. In June two
Speaker 1: thousand three, the Circuit City board of directors had a
Speaker 1: big decision to make. Another company was coming to the
Speaker 1: table with an offer, and that other company was comp
Speaker 1: Usa Incorporated. The offer was at one point five billion
Speaker 1: dollar acquisition deal, but the board of directors decided not
Speaker 1: to pursue the offer and rejected it. By two thousand four,
Speaker 1: things were looking pretty grim. In a single day, Circuit
Speaker 1: City announced three thousand, four hundred job cuts, and not
Speaker 1: just any jobs. They cut sales associates, people who had
Speaker 1: the most knowledge and experience and tenure with the company.
Speaker 1: They were also, no coincidence, the highest compensated in that
Speaker 1: department in these sales associate roles. Now their replacements lacked
Speaker 1: that knowledge and experience that they needed in order to
Speaker 1: succeed in their new roles. The Wortzels would have found
Speaker 1: this entire move unacceptable. You might remember in my last
Speaker 1: episode I talked about how Samuel Wurtzel had always stressed
Speaker 1: the importance of training and setting employees up for success.
Speaker 1: Now this move put unqualified people into positions without proper preparation,
Speaker 1: through no fault of their own, and it was a
Speaker 1: huge mistake. At the same time, Circuit City executives were
Speaker 1: awarding themselves big retention bonuses in order to keep various
Speaker 1: executives from jumping ship. So this had a devastating effect
Speaker 1: on employee morale. You've got the most knowledgeable employees booted,
Speaker 1: you've got people unqualified put into new positions, and you've
Speaker 1: got the executives at the top rewarding themselves seemingly in
Speaker 1: spite of all the employees. So this was sending a
Speaker 1: really bad message not just two employees, but also to
Speaker 1: vendors and also customers, and losing those experienced employees and
Speaker 1: demoralizing the rest of the workforce trickled down into that
Speaker 1: customer experience. It became increasingly unpleasant to shop at Circuit City.
Speaker 1: Stores were poorly organized in staff and uh, and customer
Speaker 1: dissatisfaction was was through the roof. Now, in two thousand five,
Speaker 1: a man named Philip J. Schoonover became the president of
Speaker 1: the company. He would then later become the chairman and
Speaker 1: CEO in two thousand six, and he would stay in
Speaker 1: that role until forced to leave in two thousand eight.
Speaker 1: That probably tells you that things did not go well. Now,
Speaker 1: if Sharp had made decisions that put the company in
Speaker 1: danger and McCullough had exacerbated matters, you could say Scoonover
Speaker 1: is the person everyone associates with the death of Circuit City.
Speaker 1: It may not entirely be Schoonover's fault. He was in
Speaker 1: a terribly difficult position when he came on board. But
Speaker 1: Alan Wertzel said scoon Over completely ignored company values, the
Speaker 1: ones that Samuel Wertzel Alan's father had instilled in the company. Namely,
Speaker 1: he said that Scoonover stopped caring about fair deals and
Speaker 1: honesty when dealing with employees and vendors. Alike, which is
Speaker 1: pretty brutal. In two thousand six, Circuit City decided to
Speaker 1: copy Best Buy, which is kind of interesting considering how
Speaker 1: many times Best Buy was essentially copying Circuit City but
Speaker 1: doing it better. Best Buy had launched an electronics service
Speaker 1: called geek Squad back in two thousand two. Geek Squad
Speaker 1: provides specialized customer service for things like equipment installation, adjustment repairs,
Speaker 1: that kind of thing for a fee, and those fees
Speaker 1: add up kind of like those extended warranties had been
Speaker 1: a huge source of revenue for Best Buy in Circuit
Speaker 1: City Alike. Well, this was four years later, but Circuit
Speaker 1: City says, all right, two thousand six, we're gonna launch
Speaker 1: our own service, which is going to be a specialized
Speaker 1: electronics service, and we're calling it fire Dog. Fire Dog, however,
Speaker 1: required a big investment. The company spent millions of dollars
Speaker 1: in the hiring, training, and resource allocation for fire Dog teams.
Speaker 1: And then it wasn't a very well coordinated effort. Some
Speaker 1: stores were lagging way behind other stores, and there was
Speaker 1: a lot of confusion and not clear messaging, and that
Speaker 1: ended up adding to the expense. Customers were confused by
Speaker 1: the service, which wasn't promoted very well and many rejected it.
Speaker 1: So while Geek Squad succeeded over at best Buy, fire
Speaker 1: Dog floundered at Circuit City. Also in two thousand six,
Speaker 1: the company made a real bold move on Black Friday,
Speaker 1: the day after Thanksgiving here in the United States, Circuit
Speaker 1: City offered an amazing deal. At the time. It offered
Speaker 1: a forty two inch panasonic plasma television for less than
Speaker 1: a thousand dollars, which was way below the normal price
Speaker 1: you would find at most play at that time, but
Speaker 1: it actually created a domino effect that caused damage. Circuit
Speaker 1: City began to slash prices to such levels that the
Speaker 1: profit margins were almost completely eliminated, meaning the company was
Speaker 1: selling products very close to what it cost the company
Speaker 1: to get them in the first place, all in an
Speaker 1: effort to regain customers. And it's a game you cannot
Speaker 1: play forever because those profits are never going to be enough,
Speaker 1: especially for a publicly traded company. Two thousand eight would
Speaker 1: see the end of Schoonover's tenure. Like I said, he
Speaker 1: was forced out of his role and an investor named
Speaker 1: Mark Waddles took over the job, which by then was
Speaker 1: not great. Sales for Circuit City were down by eleven
Speaker 1: percent and the company had suffered more than a hundred
Speaker 1: fifty million dollars in losses. Things were ugly. In April
Speaker 1: two tho eight, another suitor came calling Circuit City, and
Speaker 1: this time it was Blockbuster, which is yet another company
Speaker 1: I could do an episode on and talk about how
Speaker 1: it failed to be nimble, sort of like Circuit City
Speaker 1: and ultimately a doomed Blockbuster. But this is Circuit City story.
Speaker 1: So Blockbuster comes up to Circuit City and says, hey,
Speaker 1: buy a for a billion dollars. So this is half
Speaker 1: a billion dollars less than the previous offer had been
Speaker 1: just a few years ago from comp Usa. But by
Speaker 1: July one, two thousand eight, Blockbuster had second thoughts. They
Speaker 1: had actually looked into the potential deal further and concluded
Speaker 1: that acquiring Circuit City would be a bad business decision. Yikes.
Speaker 1: So Circuit City stocks plummeted as a result. If someone
Speaker 1: comes up and says, hey, do you want to go
Speaker 1: to the problem that you know what? Never mind, I
Speaker 1: can do better, It's probably not gonna help your self esteem.
Speaker 1: The same is true with with investor confidence in Circuit
Speaker 1: City after this event, and yeah that that story comes
Speaker 1: from Jonathan's past, thank you not to pursue it further.
Speaker 1: By November two thousand eight, the company was bailing water
Speaker 1: Circuit City and now it would close one fifty five
Speaker 1: stores and layoff more than fifteen percent of its workforce
Speaker 1: by the end of the year, and just a little
Speaker 1: bit later, seven hundred corporate employees, the people who worked
Speaker 1: at Circuit Cities corporate headquarters were let go. All the
Speaker 1: other corporate employees were moved into the same building to
Speaker 1: cut costs so they didn't have to have as much
Speaker 1: office space, and on November ten, the company filed for
Speaker 1: bankruptcy for Chapter eleven and started searching for a White
Speaker 1: Night to rescue them. The whole idea was that, you know,
Speaker 1: by filing for bankruptcy, you get a little breathing room.
Speaker 1: The goal is to try and get out of bankruptcy
Speaker 1: and go back to business. But at this point it
Speaker 1: was too late. No one was willing to jump forward
Speaker 1: and try to write a sinking ship, not for a
Speaker 1: company that had lost five billion dollars in stock market
Speaker 1: value in just twenty four months. There were still hopes
Speaker 1: that a company could re emerge from this bankruptcy. It
Speaker 1: just wasn't meant to be. There was a brief moment
Speaker 1: of hope when it appeared that a retail busines this
Speaker 1: men from Mexico, might swoop in at the last second,
Speaker 1: but after purchasing a little less than thirty percent of
Speaker 1: the company, that just stopped. A lot of questions were
Speaker 1: raised about why someone would come in and buy up
Speaker 1: a third of a company that was doomed to failure
Speaker 1: and not try to do more. So the company at
Speaker 1: this time was still trying to do business like stores
Speaker 1: were still open and still trying to sell merchandise, but
Speaker 1: those bankruptcy proceedings had really hurt them beyond just that
Speaker 1: backstage stuff. I mean, customer confidence had withered away and
Speaker 1: the company lacked the resources to try anything new to
Speaker 1: bring customers back in. So in January two nine, they
Speaker 1: couldn't keep things going any longer, and the company was
Speaker 1: forced to liquidate all its assets, and over the next
Speaker 1: few months, the company would close stores, layoff workers, liquidate
Speaker 1: things until the final store closed on March eight, two
Speaker 1: thousand nine. But that's not quite the end of the story.
Speaker 1: On April two thousand nine, a company called Systemax Incorporated,
Speaker 1: purchased the intellectual property of Circuit City, which include the
Speaker 1: company's name and their customer database. So for several years,
Speaker 1: circuit City existed but essentially existed in name only, and
Speaker 1: Systematx used it here and there until two thousand twelve
Speaker 1: when they figured this name doesn't really have any value
Speaker 1: anymore and they just stopped using it. But you might
Speaker 1: think this is when the company died off, and you'd
Speaker 1: still be wrong, because it's zombie time. It's like closing time,
Speaker 1: only with more brain devouring. Now. One thing Circuit City
Speaker 1: had continued to do in this time, despite no longer
Speaker 1: being a viable entity, was made charitable donations, which is weird, right.
Speaker 1: You might wonder, how can a company that doesn't exist
Speaker 1: fund charities? Well, it's because the company had established a
Speaker 1: fund and deposited money into the fund spec typically for
Speaker 1: the purpose of making regular charitable donations, and there's still
Speaker 1: money in it, so the fund still pays out year
Speaker 1: over year. Last time I checked, there's a little bit
Speaker 1: more than a million dollars in that fund. So it
Speaker 1: won't go forever. It will eventually drain, but for the
Speaker 1: time being, there's still money from Circuit City funding charities,
Speaker 1: and now there are new owners of the Circuit City
Speaker 1: intellectual property. So from sixteen that name remained unused, but
Speaker 1: then a new group came in and purchased the i
Speaker 1: P from Systemax. The new CEO is a guy named
Speaker 1: Ronnie Schmohl, who said that plans are in place to
Speaker 1: open kiosks and stores. Originally they had aimed at kind
Speaker 1: of the summer often but that didn't actually happen, and
Speaker 1: according to the new owners, the reason for that is
Speaker 1: they want to make sure that they do it correctly.
Speaker 1: So we're still waiting as of the recording of this
Speaker 1: podcast to see that happen. But if the owners are
Speaker 1: six us, well, we may see a return of the
Speaker 1: Circuit City brand under new ownership. It'll be a new entity,
Speaker 1: uh kind of not that different from the way Atari
Speaker 1: came back. But we have a very different market place
Speaker 1: today than we did even back in two thousand nine.
Speaker 1: Online purchases are on the rise, Brick and mortar stores
Speaker 1: are having trouble getting consumers to actually visit physical stores,
Speaker 1: so it may end up that Circuit City will become
Speaker 1: an online only enterprise, although that's not necessarily the plan.
Speaker 1: If it works at all, but like I said, the
Speaker 1: plan is to open real, actual stores, so perhaps in
Speaker 1: the future I'll need to record apart three to this story, Kevin,
Speaker 1: I hope you enjoyed that. It's your request after all,
Speaker 1: and then now it's time for me to sign off.
Speaker 1: And guys, if you have any questions or suggestions about
Speaker 1: this or any other episode you have something that you
Speaker 1: want me to talk about or revisit, please let me know.
Speaker 1: Ditto if you want me to her view someone specific
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