Economic Darwinism: It appears that more people will be added to the unemployment roles in 2009 as Circuit City has decided to close its doors.
Circuit City, the US’s second largest consumer electronic chain is pulling the plug and shutting its doors for good and going out of business. Circuit City had filed bankruptcy in November 2008 and hoped to emerge in a more stream-lined version of itself has sadly decided to liquidate all of its stores and assets and go out of business. U.S. Bankruptcy Judge Kevin Huennekens gave final approval to the liquidation plan Friday afternoon. The news is sad and the plight of their employees in the US is even more sad but can anyone really remember the last time the went to a Circuit City instead of Best Buy? Maybe this was just the inevitable process from not being able to deal with competition.
Most of the chain’s 34,000 store employees will be laid off. Closing sales will begin as early as Saturday and will last until the merchandise is gone or about the end of March.
Just last week, Circuit City, with 567 stores, was in talks with two potential buyers, but it was unable to reach an agreement with its creditors and lenders.
“We are extremely disappointed by this outcome,” said James A. Marcum, acting president and chief executive of Circuit City Stores. He called the liquidation “the only possible path” for the 60-year-old company.
The demise of Circuit City, while not surprising given its declining sales, is part of a radical shift taking place in retailing. Weak chains — unable to weather the freeze-up in consumer spending and choked by tight credit markets — are closing.
Booman Tribune makes a valid point that the demise of the the second largest electric retailer is not a good sign of things to come. The unemployment numbers will rise and maybe bankruptcy laws are too difficult to come back from. However, there is no bail out that would have ever helped a company that had fallen behind the times. Although in many ways companies have only them self to blame, when it came to electronic retail one thought of Best Buy and Circuit City was not even an after thought. US companies do have to compete for our dollars and should never just take for granted that just because they exist people will buy from them. There is always a new company with a new vision and a better mouse trap in the 21 century US businesses better not fall back on the motto “that is the way we have always done it” as Darwinism has never been more evident than in our present day economy.
The company’s inventory has a retail value of about $1.8 billion, said James Schaye, president and CEO of Hudson Capital Partners, the liquidator. He said sales will begin with up to 30 percent discounts and will be adjusted as the liquidation continues.
“There’s a lot of great deals,” Schaye said. “If you’re competing against someone like Best Buy, we’re going to be at a much better discount than they’re going to be.”
It was unclear what would happen to the company’s 765 retail stores and dealer outlets in Canada. Galardi told a judge there are still bids for the Canadian business.