Best-Selling Business Author: What Destroyed Circuit City? Not the Economy

McKain: Closer look reveals common mistakes bound to destroy countless others

The following is an opinion editorial provided by Scott McKain:

Today’s announcement that Circuit City is liquidating and saying goodbye to customers and associates appears to be another piece of bad news about a deteriorating economic situation. However, it’s NOT the economy that created the bulk of Circuit City’s problems! It’s the approach, strategy, and management that doomed this “great” business.

I placed “great” in quotation marks, because Circuit City is one of only eleven companies named by Jim Collins as primary examples of corporate superiority is his mega-bestseller, “Good to Great.” Any reasonable examination would clearly conclude that the electronics retailer moved a long, long way from any standard of supremacy.

Advertising Age recently reported, “50-, 60- and 70-somethings use many technologies at rates comparable to those among younger consumers, according to a study by the Consumer Electronics Association and TNS Compete of 3,135 adults in November 2008. The trick to reaching this group is to give them some personal attention. Sixty-three percent spoke with a sales associate in person when researching their consumer-electronics purchases, compared with 47% of those 18 to 49.”

A year ago, however, Circuit City thought they would cut costs by firing the most experienced staff. Which meant that you couldn’t find anybody who knew what they were talking about to wait on you! When 63% of the most affluent customers need to talk to someone…and you don’t have qualified people available…guess what happens to sales? (And, don’t forget, needing assistance from a qualified representative does not vary based upon the economy!)

Today’s announcement was simply the final nail in the coffin. I told the “Wall St. Journal” this past week there was no way Circuit City would get out of this mess. It’s NOT about the economy…it IS about they way they failed to differentiate themselves through compelling customer experiences.

And it was not “Great” at all.

Scott McKain is the Vice Chairman of Obsidian Enterprises, co-founder of The Value Added Institute and author of “Collapse of Distinction – Stand Out and Move Up While Your Competition Fails”. Read more on his blog at http://mckainviewpoint.com/.

SCOTT MCKAIN IS AVAILABLE FOR INTERVIEWS

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