An Executive Summary of Circuit City - A Leader in the Industry of Electonic Retailers

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Executive Summary
During the development from 1949 to 2000, Circuit City achieved aggressive expansion and became the leading company in the industry of electronics retailer. However, fiscal 2000 was an important transition year for the company. The more and more intense competition and the decreasing profitability for years made the company face with unprecedented challenges. These problems were caused by the following reasons:
1. Overexpansion. The company expanded its business and took more and more market share in the cost of decreasing profitability.
2. Being distracted from core business. The company paid a high price of $114 million for its investment on Divx without any achievement in this trial of diversification.
3. Sticking on old service model and outdated winning strategy. When the demand of consumers changed, the company still insisted on its old service model which was successful in the past, but couldn’t retain and attract customers any more.
Problem Statement
Till fiscal 2000, Circuit City was still the leading company in consumer electronics industry. However, Best Buy, which was extremely competitive with Circuit City, had surpassed Circuit City in sales and operating profit, and was growing in a much faster speed. The stock price of Best Buy was approaching that of Circuit City. It showed that the competition from Best Buy was more and more fierce.
The sales and profit of Circuit City in appliance market decreased because of the increasing competition from discount retailers, such as Sears, Wal-Mart, and Home Depot.
With development for so many years, the stores had been out of fashion. Its brand image was not attractive and distinctive to customers as before.
Data Analysis
The problems existed in Circuit City...

... middle of paper ... way, the company could reduce costs from staff, inventory and others.
Third, the company should fully know the taste and preference of consumers and change its full-service model to self-service model or other more effective model. Always satisfying the demand of customers and providing exactly what they want is important.
Next, the company should take the advantage of e-business and build up its online business. The online business is an effective supplement of its downsized physical business and revolutionized service model.
Finally, the company should remodel outdated stores. The remodeling should focus on the differentiating brand image and give customers distinctive shopping experience. After remodeling, the customers should clearly know what’s special Circuit City could provide them and put Circuit City in the first place when making purchase decision.
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