CIRCUIT CITY

By: Nicholas Holt, Silvana Karam, Ashish Patel

Mission Statement
 Previous Mission Statement:
Throughout our 50+ year history, Circuit City has
differentiated itself by creating a shopping experience focused
on customer needs and expectations. With over $10 billion in
sales, we have grown into a Fortune 500 company of over
35,000 people, with more than 600 stores in more than 100
markets. With our current branding efforts, new store designs,
and implementation of process improvement practices, today
is one of the most exciting times in the history of Circuit City!
It is a time of strategic change and revitalization!
 Products and Services of Circuit City

 TV & Home Entertainment

 MP3 & Audio (iPod’s, speakers)
 Computers & Office Supplies
 Cameras & Camcorders
 Car Electronics
 Video Gaming (PS3, Wii, PSP, Xbox)
 Movies & Music
 Phones
 Repair & Installation (Firedog)
Industry Sector
 Sector: Services
 Industry: Electronic Stores
Position in the Marketplace
 Market Leader: Best Buy
 Circuit City is the #3 Consumer Electronics Retailer
in the industry after Wal-Mart
 2008: Circuit City is #215 in the Fortune 500
company list.
Competitors
 Direct Competitors
 Best Buy
 RadioShack
 Wal-Mart
 Dell

 Indirect Competitors
 CompUSA
 Home Depot
 Present Circuit City Stock
 52 Week High: $18.87
 52 Week Low: $3.44
 Current Stock Price: $4.66
 Current Stock Value has dropped 88%
 Income Statement
2007 2006 2005
Gross Profit 2,928,316 2,830,932 2,568,723
Operating Income -5,303 220,399 97,855
or Loss
Net Income -8,281 139,746 61,658

 The Operating Income or loss declines dramatically

in 2007 due to the major turnover rate
 As you can see, the Net Income of Circuit City
dropped substantially in the past year.
Profit/Loss Analysis
 Balance Sheet
2007 2006 2005
Total Assets 4,007,283 4,069,044 3,789,382
Total Liabilities 2,216,039 2,114,411 1,701,948
Total Shareholder 1,791,244 1,954,633 2,087,434
Equity

 The Total Assets from 2005-2007 are gradually

dropped while the Total liabilities from these years
have gradually grown.
 The Shareholder Equity has dramatically fallen in
the past 3 years
 Circuit City Timeline
 1949: Samuel Wurtzel starts Wards Company in Virginia
 1961: The company goes public
 1979: The Superstore format is introduced (32,000sq ft)
 1984: Changed its name to Circuit City and became listed in the
NYSE
 1999: CircuitCity.com is launched
 2004: Acquired InterTAN, Inc.
 2006: Firedog was operational
 2007: Fired 3400 of the highest paid employees.
Announces plan to explore alternatives for InterTAN, Inc.
Management
 CEO: Philip Schoonover
 Former Vice President of Customer Segments for

Best Buy
 COO: John Harlow
 CFO: Bruce Besanko
 CMO: Peter Weedfald
 Headquarters: Richmond, Virginia
Marketing
 Community Involvement: Boys & Girls Club,
Habitat for Humanity, United Way, and the
American Red Cross
 Wide array of offers from our partners
 Napster

 E-Commerce Site: circuitcity.com

 “Just what I needed”, “Simplicity guaranteed”
 Attracts more customers over age 45
 Main Competitors Marketing
 Best Buy
 “Thousands of possibilities, get yours”

 Targets younger consumers

 Wal-Mart
 “Save money, live better”

 RadioShack
 “Do stuff”

 Circuit City spends more money on marketing compared to

their leading competitors, yet the competitors still have an edge
 Our competitors promote merchandise more aggressively and
offer better discount prices for extended periods of time
Customer Service
 Circuit City was rated the worst customer service
in the electronic retail industry
 Under-trained staff leads to a high turnover rate
 Many of our associates are part-time, which affects
our sales performance and competition
 Numerous defective items and restocking fees
Positive Aspects of Circuit City
 Offers a wide variety of products
 Teamed up multiple partners…(Napster, InterTAN,
Direct TV, SnapFish, Get Digital, SkinIt)
 Firedog prices are much cheaper than Geek Squad
Development
 650 stores in the United States
 In 2003 Circuit City remodeled 222 stores
 In 2005 Circuit City closed 19 of our
underperforming Superstores
 Openings in smaller trade areas and urban locations
If no changes are made…
 Possible Bankruptcy
 Hostile takeover by a possible buyer (Blockbuster,
Inc.)
 1.3 Billion Dollar Offer ($6-8 a share)
 Merger with Blockbuster
 Circuit City gains 4800 additional stores and
differentiates itself from Best Buy by offering movie
and video-game rentals
Porter’s 5 Forces
 Threat of Entry of New Competitors
 Small computer electronic companies
 Threat of Substitutes
 Non-brand name computers (Acer, Compaq)
 Bargaining Power of Buyers (Elastic)
 Bargaining Power of Suppliers (Inelastic)
 Degree of Rivalry Between Existing Competitors
 Pricing war between small companies
How to Start Over
 Need a more experienced management team for
Circuit City
 In the past, hiring executive officials from other
successful companies have worked out well
 Better list of priorities and goals for the company to
achieve
Objectives/Goals
 Relocation & Closing of Circuit City Stores
 Inside Malls
 Beside large shopping plazas
 Smaller and more specialized stores. Moving away from
“superstores”
 Getting rid of underperforming locations
 Be more aggressive in buying new real estate
 Be more aggressive in marketing and sales to raise market
share
 Hire more trained and skilled associates to improve customer
service
Objectives/Goals
 Firedog
 Make Firedog more available to small businesses
 Clean sweep of the Circuit City Exec. Board
 Discontinue international business
 “The City”
 A more desirable shopping
experience
Intended Results
 The newly appointed executives will turn the
company around with better long term decisions.
 The opening of domestic segments
 Prepared for future technology
 Increased consumer traffic in sales due to better
marketing
 Will stay the #3 Consumer Electronics Retailer for
now, long road ahead.
Conclusion
By making these changes, we truly believe that Circuit City
can be turned around.
New Mission Statement: Circuit City is dedicated to the
highest quality of customer service which is done with the
highest respect. With a highly praised customer service and
satisfaction, it will improve our sales performance. For Circuit
City to effectively sell products to customers, sales
representatives will try to understand and fulfill the customers
needs. With a highly trained team of associates, Circuit City
will be successful in the long run.