Circuit City filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code. I caught this very nice timeline of what news came out during its 98% plunge in share price.
I found a comment in one of the blogs discussing Circuit City interesting. What went wrong with their business?
I am sure people would like to blame their staffing change. Perhaps that how revisionist history may play out.
I see the staffing change as an attempt (albeit an ultimately unsuccessful one) to forestall this very happenstance.
Brick and Mortar stores simply cannot compete with the “no sales tax” and “free shipping” internet age. Brick and Mortar can only cater to those who
(1) need an immediate gratification
(2) do not have the means to purchase over the internet.
#1 is a very delicate balance as to price sensitivity, and can’t sustain a huge chain.
#2 tends to be of a certain income range and DEFINITELY cannot sustain a huge chain.
The internet got them … but blame the re-staffing if you want.
So what do you think is the reason for Circuit City’s failure?
Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.
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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.
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