Circuit City turns into Cricket City (as in the sound of)…

cricket city (as in the sound of)Back last April in a piece entitled “Logan’s Run at Circuit City” I described how this forward-thinking electronics retailer had taken the bold move of laying off 3,400 of their highest paid ($14 – $15 hour) and most experienced workers and was replacing them with younger less experienced workers at $9 an hour.

I am happy to report that this strategy has produced stunning results for the chain – sales have fallen 11.4% and the stock price is down by 80%.

Apparently, all those fickle customers decided that they needed service from experienced sales people and not just minimum wage slaves.

Another funny thing, Circuit City found that there weren’t all that many willing candidates to fill all of those newly available positions.  After all, who wants to work for a company that rewards hardworking, loyal and knowledgeable sales persons with a pink slip?

Leading the brain trust over at Circuit City is C.E.O. Philip Schoonover who gets a little more than $15 an hour.  It must have stockholders wondering if they could get better results by hiring a $9 an hour replacement.

The bottom line to all of this – who wants to buy high tech from a company that acts like it is still in the dark ages.

I smell a Harvard Business case.

Leave a Reply

You must be logged in to post a comment.