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Former Circuit City chief tells all

Lena Price October 18, 2012 7

When former Circuit City chief executive Alan Wurtzel saw the electronics giant losing ground to Best Buy and Amazon in the early 2000s, he knew the company his father built was in trouble.

But he said he couldn’t do anything to stop it.

“After I left, my successors became very focused on the bottom line ‑ the profit margin,” Wurtzel told a group at the University of Richmond on Wednesday evening as part of the Robins Executive Speaker Series. “They were too focused on Wall Street. That was the beginning of the end.”

After getting his start as a delivery boy for his father’s TV store in the 1950s, Wurtzel rose to the top as the company’s CEO during its heyday through the 1980s and as chairman through the early 90s. When he retired as chief executive in 1986, Circuit City sales totaled more than $1 billion annually.

But Wurtzel said the model that led to such high earnings during his time at the company didn’t translate to the 21st century.

He said customers outgrew the need for a salesperson to greet them at the door and give them advice about what TV to buy. The personalized service was a Circuit City trademark that was basically replaced by the Internet, Wurtzel said.

The company also refused to sell items such as video games because they had a low profit margin, he added.

“We systematically positioned ourselves for the older market and excluded the younger generation,” Wurtzel said. “Best Buy was happily catering to that market.”

The company announced mass layoffs and pay cuts in 2008, but Wurtzel said that by that time it was too late. Circuit City closed its doors for good in a colossal bankruptcy in 2009, leaving hundreds of empty storefronts across the country and its massive headquarters complex in Glen Allen vacant.

Wurtzel, who now lives in the Washington area, has chronicled the rise and fall of Circuit City in his new book, “Good to Great to Gone,” which comes out this month.

“I wanted to understand what happened to Circuit City,” Wurtzel said. “I was present at the creation, and I saw it through to the end. I wanted to present an unbiased, objective view.”

Wurtzel said there business owners should learn a few things from the story. It’s important to be humble and curious and to always assume there’s someone behind you working faster and smarter, he said.

“There’s no exact formula for a good strategic plan, but there are certain habits of mind that can influence success,” he said. “That’s what I want everyone to take away from the Circuit City story.

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7 Comments »

  1. Mighty Casey October 18, 2012 at 7:57 am - Reply

    That’s a book I’ll definitely read – great reality check to “Good to Great”, which is now pretty dated.

  2. Beth October 18, 2012 at 8:04 am - Reply

    Personal service…IF you were white and a man. He’s delusional if he thinks his staff practiced good customer service. I know too many people who were snubbed and treated badly because they were minorities. I was told the saleman would find time to talk to me when my husband joined me. I walked out and never returned–making sure the manager saw my gold card before I left. More and more, EVERY industry is about CUSTOMER SERVICE. That is the change in the market CC failed on!

  3. Drew October 18, 2012 at 8:18 am - Reply

    I like the play on Jim Collin’s Book “Good To Great” since Circuit City was featured in the book. I may have to check out the book.

  4. Tom October 18, 2012 at 11:17 am - Reply

    Good to Great to Gone will be available on Tuesday, October 23rd. You can order one through the book’s web site, http://www.circuitcitythebook.com.

  5. R Sweeney October 18, 2012 at 1:33 pm - Reply

    Circuit City, like all the Wards entities before it, had predatory customer service. They routinely pretended to be out of sale items when in fact there were cases of them in plain view in the back.

    They always tried to steer customers from sale items to goods with higher profit margins.

    Circuit City was always a hold-your-nose and just go there kind of place for me. It could not survive ANY competition.

  6. Calvin October 19, 2012 at 10:44 am - Reply

    It will be interesting to see if/how Wurtzel deals with some of the specific strategic shifts that Circuit City underwent during the 10 year period from Great to Gone.

    For example, the effect of diversification with CarMax, Divx, and FNANB; and moving the Circuit City sales force compensation model to a fixed salary from incentive-based.

  7. Elle L. October 23, 2012 at 1:27 pm - Reply

    I was an accountant for CCity. Schoonover and Obama had the same thought process. Spend a bunch of money and worry about it tomorrow. We nicknamed him Soonover in 2008. Unbelievable reckless spending.

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