Consumer electronics retailer
Circuit City Corporation, Inc., formerly Circuit City Stores, Inc., is an American consumer electronics retail company, which was founded in 1949 by Samuel Wurtzel as the Wards Company, operated stores across the United States, and pioneered the electronics superstore format in the 1970s. After multiple purchases and a successful run on the NYSE, it changed its name to Circuit City Stores Inc.
The brand name was re-established by Ronny Shmoel in 2016 as part of his acquisition of the brand name and trademark rights sold by Systemax, which formerly operated the CircuitCity.com website from 2009 until 2012, when it was consolidated into the TigerDirect brand.
History.
As Wards Company (1949–1984).
In early 1949, Wurtzel was on vacation in Richmond, Virginia when, while at a local barber shop, he was witness to the start of television in the South. Imagining the opportunities, in late 1949, he moved his family to Richmond and opened the first Wards Company retail store. Later, Abraham L. Hecht joined him as a partner in the business.
By 1959, Wards Company operated four television and home appliance stores in Richmond. The company continued to grow and acquired stores in other locations including Albany, New York; Mobile, Alabama; Washington, D.C.; and Costa Mesa, California. During the 1970s and early 1980s, it also sold mail-order under the name "Dixie Hi Fi", advertising in hi-fi magazines. Wards experimented with several retail formats in Richmond, including smaller mall outlets branded "Sight-n-Sound" and "Circuit City".
Samuel Wurtzel served as president of the company until 1970 and remained the chairman until 1984. Alan Wurtzel, his son, became CEO of Wards in 1972 and initially focused on digesting the acquisitions and shedding unprofitable operations. After developing a long range plan for the company in 1973, construction began on a distribution center and new corporate offices building at 2040 Thalbro Street (named after Thalhimer Bros. Department Store) in Richmond, Virginia and in the extra space, "Wards Loading Dock", its first warehouse showroom opened on May 1, 1975. The large-format store was popular with customers. The company continued to expand with the new format modeled after "Wards Loading Dock" and renamed it Circuit City Superstore in 1978; the first locations called such opened on June 22 of that year in North Carolina.
As Circuit City Stores (1984–2009).
Wards Company officially changed its name to Circuit City Stores, Inc., and became listed on the New York Stock Exchange in 1984. One of the company's early slogans was "Circuit City — Where the Streets are Paved with Bargains". The company, which had leased floor space from the Zodys discount stores as well as other department stores, began acquiring retail stores and turning them into Circuit City Superstores. The first of these replacements occurred in Knoxville, Tennessee; Charleston, South Carolina; and Hampton, Virginia.
In 1981, Circuit City entered the New York City market by acquiring the six remaining stores of the bankrupt Lafayette Radio chain. They operated the stores under the "Lafayette/Circuit City" name and expanded to 15 locations, but the stores were not profitable and were closed in 1986 after spending US$20 million (~$ in 2023) to enter the market.
In 1985, Circuit City entered the Los Angeles market by opening seven Superstore locations in former The Akron discount stores. The next year, Circuit City opened five more Superstores in the market and closed the licensed electronics and appliance departments it operated in Zodys stores. The new stores featured the "red tower" entrance that ultimately became a trademark of the company. The towers were designed to make the store more identifiable to drivers among the endless stores and shopping centers in Los Angeles.
In 1988, Circuit City began constructing the new "plug" design Superstore formats. The company also returned to New York City opening a superstore in Union Square, the first of two planned Manhattan locations. In late 1988, Circuit City had an opportunity to purchase Best Buy, a growing competitor at the time, for US$30 million (~$ in 2023). The offer was rejected by Richard Sharp, Circuit City's CEO, since he believed they could open a store in Best Buy's home territory of Minneapolis and easily beat the competitor.
During this era, Circuit City became known for its exceptional service, going so far as to have many of its staff factory-trained. Its slogan, likewise, was "Welcome to Circuit City, Where Service Is State of the Art".
Many Circuit City stores were out-of-date and in bad locations, unable to compete with newer Best Buy stores. In 2000, Circuit City moved away from the Superstore showroom format and introduced a new more self-service "Big Box" format called "Horizon." The new format eliminated the red tower entrances and moved the entrance to the center of the store. The selling floor was enlarged with lower sight lines and the race track was removed. A central checkout was located at the front of the store and shopping baskets were added for small items. Appliances were eliminated to make room for games, computer peripherals, and other small electronics. The plan was to open stand-alone major appliance stores, but later that plan was dropped. One new store in Jacksonville, Florida incorporated the new design and twenty-five existing Florida stores were remodeled to this format.
In July 2000, Circuit City abandoned the large appliance business in all stores to make space for more small electronics. This was controversial because in the previous year Circuit City was the second largest appliance retailer in the United States, behind only Sears. The company had earned nearly US$1.6 billion in sales revenue from large appliances in 1999. However, executives were concerned about the competition from Home Depot and Lowe's and believed there would be big savings in warehouse storage and delivery costs if they quit the large appliance business. It was later realized that Circuit City thus missed out on the residential housing boom of the mid-2000s, which saw a dramatic rise in new-appliance sales.
Every Superstore was retrofitted after the exit from the large-appliance business, using the space for an expanded self-serve computer accessory and software selection. Under an exclusive agreement with Sony, the only games that had been sold at the stores were PlayStation games. The new space allowed them to sell Nintendo, Sega, and eventually Xbox games after the agreement ended. Music and movie sales had been added to most stores years before, but the extra space allowed the selection to be added to smaller stores. The retrofitting project alone cost the company US$1.5 billion.
Another store format, called "Tide", was created based on research conducted that found women and teenagers were not respected by the Circuit City sales staff. The front of the store featured windows allowing customers to see in and the signage was improved. Power poles and movable fixtures allowed for easy rearrangement of the store and lowered the cost of remodeling older locations since the floor did not need to be trenched. In 2001, Chicago stores were remodeled with parts of this format and all new locations opened with this design.
In March 2002, Circuit City purchased the key assets for 800.com, which included their entire 2.6 million customer list, websites, and marketing assets. Financial terms of the deal were not disclosed.
In 2003, Circuit City converted to a single hourly pay structure in all stores, eliminating commissioned sales. Many previously commissioned sales associates were offered new positions as hourly "product specialists", while 3,900 salespeople were laid off, saving the company about $130 million per year. Many company insiders later revealed that they thought this was the most influential company decision that would ultimately lead to its demise.
In 2004, with the expansion of the wireless phone market, Circuit City partnered with Verizon Wireless to include full-service Verizon Wireless sales and service centers in each Superstore. These locations were owned and staffed by Verizon Wireless. Circuit City stopped selling wireless phones with all other carriers due to the agreement.
In April 2004, Circuit City announced its purchase of Canadian retailer InterTAN. Circuit City paid approximately US$284 million for InterTAN's 980 stores, which operated in Canada under the trade names RadioShack, Rogers Plus, and Battery Plus. Chairman and CEO Alan McCollough believed these existing small-format stores provided an easy entry into Canada, a country where Best Buy had been expanding. RadioShack sued InterTan in April 2004 over the branding use of RadioShack in Canada. Circuit City lost the lawsuit and all Canadian locations were renamed The Source by Circuit City in 2005. These stores were sold to Bell Canada and continue to operate.
In 2007, a new store format was introduced as "The City" and designed to eliminate previously under-utilized space. The smaller format gave the company greater flexibility to enter new markets and backfill existing ones. Most new store openings in 2008 used this new store format.
On February 8, 2007, Circuit City announced that it planned to close seven domestic Superstores and a Kentucky distribution center to cut costs and improve its financial performance. News reports also mention that 62 stores in Canada were to close.
Circuit City announced on February 23, 2007, that its chief financial officer, Michael Foss, would leave the company. This unsettled investors and analysts concerned about management turnover. "This represents the third departure of a senior executive in the past six months, and the second departure of a top-five executive in the past month" said Goldman Sachs analyst Matthew Fassler in a client note. Chief Executive Officer Phil Schoonover's "hand-picked team is turning over faster than we would like to see in a turnaround situation."
In 2007, the starting wage for new employees was dropped from $8.75 an hour down to $7.40 an hour ($6.55 being the federal minimum wage at the time). In a press release on March 28, 2007, Circuit City announced that in a "wage management" decision in order to cut costs, it had laid off approximately 3400 better-paid associates and would re-staff the positions at the lower market-based salaries. Laid-off associates were provided severance and offered a chance to be re-hired after ten weeks at prevailing wages. The "Washington Post" reported interviews with management concerning the firings. The "Post" later reported in May 2007 that the layoffs, and consequent loss of experienced sales staff, appeared to be "backfiring" and resulting in slower sales.
In April 2008, video rental firm Blockbuster announced a bid worth $1 billion (~$ in 2023) to purchase Circuit City. In July 2008, Blockbuster withdrew its offer due to market conditions.
In August 2008, the chain's head office demanded stores destroy all copies of an issue of "Mad" magazine which described "Sucker City" as a chain with a long list of locations, all in proximity to each other and each adjacent to a rival Best Buy store.
Philip J. Schoonover, CEO, president and chairman of the board of Circuit City Stores, Inc. announced his immediate resignation on September 22, 2008. James A. Marcum, former vice chairman of the board, was named acting CEO. Allen King was selected chairman of the board.
This switch was said to be due to a stream of losses stemming from the rapid decline of flat-panel TV prices, and possibly due to the strong call for Schoonover's removal from activist shareholder Mark Wattles.
Bankruptcy and liquidation.
On November 4, 2008, Circuit City announced that it would close 155 stores and lay off 17% of its workforce by the end of the year as a result of continuing difficulties in remaining profitable. On November 7, 2008, Circuit City laid off between 500 and 800 corporate employees from its Richmond, Virginia headquarters. The approximately 1,000 remaining corporate employees were consolidated into one building in an effort to further reduce costs and improve profitability. On November 10, 2008, Circuit City filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Virginia. At that time, Circuit City's stock traded well below $1 per share, and was removed from listing on the New York Stock Exchange.
In bankruptcy court, Circuit City was approved to borrow $1.1 billion to finance operations while restructuring. Court filings revealed that the company had assets of $3.4 billion and debt of $2.32 billion, including a $119 million debt to Hewlett-Packard and a $116 million debt to Samsung Electronics. Chief executive James A. Marcum promised that the stores would stay open and the chain would not be liquidated.
On November 18, 2008, it was announced that Ricardo Salinas Pliego, current