Is Best Buy making a Circuit City mistake?

Posted Apr 27th 2009 3:50PM by Brian White
Filed under: Employees, Best Buy (BBY)

Best Buy, Inc. (NYSE: BBY) won the war with defunct rival Circuit City. Circuit City's demise was based on so many fundamental pieces of mismanagement it was amazing the company lasted into 2009. Now that it is gone, Best Buy stands alone with the larger discount retail chains and online superstores as the places tens of millions of Americans shop for this consumer electronics.

Can Best Buy go anywhere but up? Not really -- it will continue taking Circuit City's market share for some time and it's hard to see management making large mistakes that would jeopardize revenue. It wouldn't dare change its staffing -- those that "touch" the customer -- on the sales floor, would it?

That was a large piece of what did Circuit City in, after all. Changes in Best Buy's staffing model are drawing that comparison, which is never a good thing. It is reported that about 8,000 senior sales associates may having an upcoming demotion to regular sales associates.

Along with that: a big cut in pay. The company has not provided specifics, so it will be interesting to see official numbers when they hit the street. Along with lowered salaries, 1,000 assistant managers could lose their jobs as those positions are consolidated throughout the retailer's markets in the U.S. If Best Buy really does make severe changes like this, the market could punish its shares just as it did Circuit City's over two years ago.

Tags: BBY, Best Buy, Best Buy staffing, BestBuy, BestBuyStaffing, Circuit City, CircuitCity, Inc., inthenews

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Reader Comments (Page 1 of 1)

4-27-2009 @ 5:11PM

Virtuous said...

These decisions only confirm that Best Buy is really Crap Buy!

4-27-2009 @ 11:31PM

wupln said...

i used to work for circuit city and i left because of management,it seems that best buy is doing the same thing, next thing they will take away appliances and that will be the end of best buys

4-28-2009 @ 12:03AM

NoName said...

This reorganization is BBY's fast track to mediocre performance, even when the economy turns around. The talent drain is going to be huge--though, they have got a little something in the deal slow it down, if only a bit. The sales teams that put Best Buy on top are having their livelihoods taken away, and this, while there is literally no reason for it. None. $9.5 billion in profit isn't enough--the idiots in Minnesota have to go and carve more out of the $12-15/hr. earners that make it all happen. I sincerely hope we get to watch HH Greg and the internet shops put these jerks out of business.

Here's a thought, Mr. Dunn: why not do right by the people that have made you so successful?

4-28-2009 @ 5:49PM

mickey said...

Best Buy is indeed another Circuit City. A lot of people said BB was next on the gallows and at first I disagreed but now?? Go into a Best Buy and you will be treated just like you were treated at CC. Employees rushing around but no one around help you. Good luck trying to get a manager to help you. Same shi+, different store. The guy that ruined CC came from Best Buy. Do the math.

9-16-2009 @ 1:12PM

Don Eames said...

Best But is not really making any of the Circuit mistakes. In the free eBook I recently published (called "CIRCUIT CITY SIX - Six Fatal Mistakes of a Once "Good to Great" Company") it's described very well. If there's any interest, the eBook can be downloaded for free at this link: http://www.eamesmgmt.com/CIRCUIT_CITY_SIX_eBook.

Don Eames
Former Senior Vice President of Best Buy