CircuitCity (NYSE: CC) is a Fortune 200 company, and the third largest consumer electronics retailer in the United States with over $11 billion USD in sales[1], behind Best Buy and Wal-Mart. As of March 28, 2007, CircuitCity's domestic segment operated 643 Superstores and 12 other locations in the U.S. CircuitCity Superstores range in size from 15,000 to 45,000 square feet (1400 to 4000 m²) and offer a large selection of brand-name consumer electronics, personal computers and entertainment software. CircuitCity's international segment operated through over 800 retail stores and dealer outlets in Canada. CircuitCity's locations in Canada are operated by InterTAN Canada Ltd which CircuitCity acquired as of May 19, 2004. InterTAN runs The Source by CircuitCity (formerly Radio Shack) chain in Canada (some of them now called La Source in Quebec) as well as THS Studio UpClose, Rogers Plus, Battery Plus and G-Wiz.
Contents
[hide]
* 1 History
* 2 Business Model
o 2.1 Major products and services
* 3 Associates
* 4 Initiatives
* 5 Community involvement
* 6 Real estate
* 7 CircuitCity-owned brand names
* 8 Slogans
* 9 Trivia
* 10 Footnotes
* 11 External links
[edit] History
The first CircuitCity logo.
The first CircuitCity logo.
In 1949, Samuel S. Wurtzel opened the first Wards Company retail store in Richmond, Virginia, at 705 West Broad Street. By 1959 Wards operated four television and home appliance stores in Richmond. The company continued to grow and acquire more stores in other locations including Albany, New York; Mobile, Alabama; Washington, DC; and Costa Mesa, California.
In 1984, the company officially changed its name to CircuitCity and became listed on the New York Stock Exchange. The company, who leased floor space from the Zody's department stores as well as other department stores, began obtaining retail stores and turning them into CircuitCity Superstores. The first of these replacements occurred in Knoxville, Tennessee; Charleston, South Carolina; and Hampton, Virginia.
In 1990, CircuitCity established the First North American National Bank to operate their private-label credit card[2]. In 2002, CircuitCity began offering a co-branded Visa credit card. They sold both these operations in 2004 to Bank One (Now Called Chase Bank).
In 2003, CircuitCity 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 3900 salespeople were laid off, saving the company about $130 million a year [3].
On February 11, 2005, a hedge fund headquartered in Boston, Highfields Capital, offered to takeover CircuitCity for $17 a share, arguing that existing management had failed to maximize shareholder value. The offer was rejected by CircuitCity's board on March 7, but doubled its own share buy back program. As of February 28, 2005, CircuitCity held cash, cash equivalents, and short term investments of $1.00 billion USD [4].
On June 27, 2006, it was announced that Philip J. Schoonover would succeed W. Alan McCollough as Chairman of the Board of CircuitCity Stores, Inc. [5].
In August 2006, at a Las Vegas convention, the name for CircuitCity's upgraded in-store and in-home services crew was unveiled as "firedogSM." firedogSM provides in-home, in-store, and online PC Services, Home Theater Installations, and more.[6]
On February 8, 2007, CircuitCity announced that it planned to close seven domestic Superstores, and a Kentucky distribution center to cut costs and improve its financial performance. [7]. News media reports also mention that 62 stores in Canada will close. [8] [9]
On February 23, 2007, CircuitCity's announced that 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 Office Phil Schoonover’s "hand-picked team is turning over faster than we would like to see in a turnaround situation." [10]
In a press release on March 28, 2007, CircuitCity announced that they had laid off approximately 3400 of their higher-paid associates in order to cut costs. Those positions will be re-staffed with newer, lower paid associates. Associates that were laid off due to the "wage management" decision were offered a chance to return after ten weeks, at the lower pay scale.[11]
After CircuitCity's mass firings, three of its former employees represented by Gloria Allred have filed a lawsuit alledging age discrimination by the company in violation of the California Fair Employment and Housing Act.[1]
[edit] Business Model
A newly designed CircuitCity store.
A newly designed CircuitCity store.
In 2001, CircuitCity introduced a new Superstore format which was much more in-line with the "Big Box Retailer" store design than its previous layouts. Newer stores have a brighter, more open sales floor aimed to more easily allow customers to browse the merchandise. The format allows for the company to put all products, except those that are too large for a customer to carry themselves, on the sales floor. In 2007, new store formats include a 30,000 square foot store aimed to eliminate previously under-utilized space. Approximately one third of new store openings will be in a 20,000 square foot store format to be utilized in smaller trade areas or as urban fill-in locations.[12]
CircuitCity has also developed, in partnership with IBM, its first online virtual-reality store based completely within the 3D virtual world of Second Life. The store was opened in December, 2006, and houses 3D representations of actual product carried in stores. Online consumers can shop in the virtual store much like they would in a real store. The Second Life virtual store project was created as part of CircuitCity's Multi-Channel initiative to branch into other areas of retailing in addition to a standard store environment.[13]
Domestic segment retail operations are overseen by the President of Retail Stores. Domestic retail operations are divided into 2 divisions. The two divisions are comprised of 10 regions which are under the supervision of Regional Vice Presidents. The 10 regions are comprised of 63 districts, which are overseen by District Managers who regularly visit stores to monitor store operations and meet with Store Management. The Source by CircuitCity is currently overseen by Steven Pappas, President of InterTAN.
Superstores are typically staffed with 40 to 80 full-time and part-time associates including: sales support personnel such as Customer Service Associates, Product Specialists (Roadshop, Entertainment, Computers and CD/DVD/Games), PC Technicians and Warehouse Associates; two or more Sales Managers; an Operations Manager, a Store director and Loss prevention. Few high volume stores are sometimes staffed with two Operations Managers and an Assistant Store Director. [14]
Superstore associates at CircuitCity locations are all paid on a non-commissioned basis.
[edit] Major products and services
Televisions, VCRs, DVD Players, and other home theater equipment.
Digital cameras, camcorders, PDAs, cell phones and accessories.
Personal computers, computer hardware and accessories.
Mobile audio and video products and related accessories.
Entertainment software; including movie software, music software, game software, game hardware, and personal computer software.
CDs, DVDs, gaming software and game consoles.
Examples of services provided are narrowband, broadband, wireless telephone service through an exclusive partnership with Verizon Wireless (while also offering Virgin Mobile, foneGEAR and Amp'd Mobile), voice-over IP, extended warranty programs, satellite radio, computer repair, in-store pickup, car audio installation and in-home video installation.
* firedog - computer repair, computer and TV installation services
[edit] Associates
At the time of its fiscal year 2005 Annual report, CircuitCity had 42,425 hourly and salaried associates working in the United States, and 3,521 associates in Canada. Comparatively, in its 2001 report, CircuitCity operated the domestic segment with 53,302 associates.
Associates in both the domestic and international segment receive frequent training through interactive E-learning courses hosted on the company intranet known as ccity.com. The E-learning courses are developed by DigitalThink. In addition to online courses, associate training tools include training workbooks, and management-driven in-store mentoring. Training includes developing selling skills, product knowledge with an emphasis on new technology, customer service, and store operations.[15]
[edit] Initiatives
Multi-Channel In the company's 2006 annual report, CircuitCity lists Multi-Channel integration as one of its primary innovation initiatives. CircuitCity defines multiple channels as the different methods that customers have of purchasing from the company; these methods include shopping in a store, ordering on the phone, on the web, or from a catalog. CircuitCity places internet kiosks in its stores so if a product is out of stock, a customer can order it online. The company has also launched a test program that enables sales associates and shoppers in 10 stores in Boston and 10 in Florida to use wireless tablet PCs to study product specifications and compare products and prices from circuitcity.com as they walk through a store. According to Internet Retailer magazine, "The merchant also has been changing its entire business structure to break down barriers between channels by investing in new or more call centers, catalogs and web-selling technologies and changing the psychology of the company and its employees.[16]"
Supply Chain Supply chain encompasses the organization and processes involved in all of the steps between obtaining product from a vendor and having the product in stock at locations for a customer to purchase. In Fiscal 2006, CircuitCity made improvements within its supply chain organization to help identify and react to consumer demand in a timely manner as well reduce the time between buying from a vendor and display of the product at the point of sale. CircuitCity has set up a subsidiary, CircuitCity Global Sourcing, Ltd (with offices in China, Hong Kong and Taiwan), to assist in obtaining inventory to sell. Most Products are shipped directly from manufacturers to the 9 CircuitCity distribution centers. Enhancements in Fiscal 2007 will continue to be made in areas such as vendor relations, distribution and warehousing, inventory management, space planning, and supply process re-engineering.[17]
Six Sigma In 2001 Six Sigma was introduced as an initiative within CircuitCity's annual report.[18] Six Sigma is applied to CircuitCity's operational side such as supply chain and distribution centers. CircuitCity applies Six Sigma methodology to its critical operational processes to measurably increase customer satisfaction while driving down cost. In May 2004 the Director of Six Sigma for CircuitCity announced that Six Sigma was being applied to very important company projects and had been used to streamline the hiring process from as much as 18 days down to 8 days. Six Sigma has since been applied to open box sales, pricing markdown reduction and testing processes such as determining the sales impact of bundling products with accessories. [19]
[edit] Community involvement
Heart of the City In early 2006, CircuitCity rolled out their "Heart of the City" initiative which is a label for the company's ongoing encouragement for all associates to volunteer for charitable causes. Volunteering is not compulsory, but is encouraged through district and store management. Each store has a monthly donation budget that it can use for donations to charity. In addition, stores organize events such as softball games, car washes, and bake sales to raise money for charities in their own communities. Included within the "Heart of the City" initiative are corporate donations and partnerships with organizations nationwide. As of June 2006, Heart of the City has developed an "Umbrella", which they consider the people and organizations they support through the program. There are four programs that fall under this umbrella which include Boys and Girls Clubs of America, United Way of America and as of December 2006, the newly created "Associate Relief Fund" which was originally an idea to help those associates directly affected by Hurricane Katrina. The Associate Relief Fund will now go to help any associate in need of assistance who otherwise wouldn't receive any.[20] [21] [22] [23]
Boys & Girls Club of America Starting in 2001, CircuitCity has partnered with the BGCA for their annual ImageMakers contest. This $5 million initiative, funded by the CircuitCity Foundation, helps BGCA develop a state-of-the-art photography curriculum, host a photography competition, provide photography resources and involve Club members in this important visual arts medium.[24][25]
Habitat for Humanity CircuitCity is a Build Partner with Habitat for Humanity. As recently as March 2006 CircuitCity made charitable contributions to the Richmond, VA. Habitat. CircuitCity associates volunteered, and assisted in the construction of several houses near the Richmond area that same month.[26][27]
American Red Cross In the wake of Hurricane Katrina, CircuitCity announced on September 9, 2005 the donation of $1 million to the American Red Cross Disaster Relief Fund. In addition to the corporate donation, CircuitCity associates participated in a "Drive for a Million" fundraising effort, which included a variety of projects (bake sales, car washes, etc.) at CircuitCity locations across the country. "Drive for a Million" allowed all associates, from stores, service and distribution centers and the company's Store Support Center, to pool their energies and contributions to benefit the American Red Cross Disaster Relief Fund.[28]
United Way CircuitCity makes charitable contributions to various organizations through the United Way and lists this organization in its "Community Involvement" section of its website.[29][30]
[edit] Real estate
a CircuitCity store
a CircuitCity store
Due to the expansion of CircuitCity stores in the 1970s-1990s, the company has accumulated a surplus of unused real estate with a presence in nearly every major market in the country. Although a typical retail location is approximately 30,000 square feet (2700 m²), they have numerous freestanding and in-line locations ranging from 2,000 to 50,000 square feet (180 to 4500 m²). They also have office, service and distribution surplus locations scattered across the country. CircuitCity's Surplus Disposition Team is dedicated to exploring creative disposition strategies. During CircuitCity's 2005 fiscal year (March 1, 2004 through February 28, 2005), the team successfully disposed of approximately 1.2 million square feet (108,000 m²) of vacant retail space. The Surplus Team utilizes facilitating assignments, third party sales, direct leases between landlords and prospective users and bringing together smaller users interested in demising big box vacancies in an effort to profit from unused real estate.[31] In January, 2007, CircuitCity's vice president for real estate announced plans on opening up 200-300 stores in the next two years, a large increase from the current trend of 10-12 stores a year
