Circuit City Stores is firing about 3,400 workers at its stores who are paid “well above the market-based salary range for their role” and will hire new associates for these positions who will earn less, the consumer electronics retailer said Wednesday.
In a news release, the Richmond, Va.-based company said the layoffs were made to improve its cost and expense structure.
Circuit City did not provide details on how much the affected workers are compensated or how much the new hires would earn at what the company calls the “current market range.”
Mark my words: Circuit City will go out of business in the near future. When you run a retail store, the in-store experience is everything. It doesn’t matter how good or bad you think their service is right now: by deciding to get rid of thousands of employees to replace them with cheaper, less experienced staff, customers will get lousy service. And be less inclined to ever return. Since they don’t offer the lowest prices ala Wal-Mart, there’s simply no reason to shop there.
No amount of advertising or marketing can save them after a pathetic business decision like this. Saving money in the short run isn’t going to help. The retraining costs and the inevitable turnover you get with the new bottom-of-the-barrel workers will hasten the decline.
They’re killing their brand. It’s that simple.
I don’t know if Circuit City will close anytime soon (Blockbuster managed to save itself from obsolescence this year by fighting Netflix on their own turf, proving that any business circling the drain can stay alive if it is willing to fight for its own survival)… but yes, this doesn’t bode well for the electronic retailer.
Replacing a chunk of its workforce with a “cheaper” workforce?! Really? Does that sound like a smart business plan?
Even before Starbucks, Whole Foods, Aveda and even Target taught us that millions of customers were more than happy to pay a premium for a better (or even a remarkable) retail experience, this kind of decision should have seemed pretty poor. Even to an MBA.
I don’t know… Maybe Circuit City could just cut health benefits for their employees too while they’re at it. Or better yet, offer their new hires zero hourly pay and let them earn 100% commission. Or how about building a tunnel under the Pacific Ocean to sneak cheap foreign labor into their stores? I hear you can get folks to work for less than a nickel a day in some parts. Who cares that they aren’t qualified to help customers choose the right piece of equipment? Who cares if their communications skills are pretty lousy? Who cares that they don’t really want to be there? Who cares if they are reliable enough to show up to work every day? Who cares if they have attitudes or can’t pass a drug screening test or have to call their PO every three hours? Who cares if they would rather spend all day IM’ing their girlfriend than helping customers? Who cares that they would rather be anywhere but in your store? Who cares if every customer gets turned off by the remarkably lousy service they get at your stores?
Why in the world would I ever want to shop at Circuit City again, knowing that a) their prices will be the same as Best Buy, and that b) the people working there are less qualified, less happy, and less motivated to help me?
File this under “101 ways to kill your business”… or “Major bonehead management decisions”.