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Dear Circuit City

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Around 2001, I recall talking with a lower-level Circuit City executive who had just left the company at a party in Richmond.

I remember asking about the Alan McCullough era — the chief executive who succeeded Rick Sharp. The lower-level executive, who shall remain nameless as he isn't really the point, told me that “all the wrong people got promoted.”

This was an awful time at the electronics retailer. A staffer had committed suicide by jumping off a balcony, and the company was furious at our newspaper, Inside Business (former sister paper to Style Weekly), for running the story. In addition, we were publishing story after story about problems with the company and its stock price. It is now close to a penny stock, around $1.70.

It was all sad, because we liked Circuit City. Growing up in Virginia, we all knew a different Circuit City. It had roots first as Ward's TV, and was on East Broad Street across from Miller & Rhoads and Thalhimers. It sold electronics cheap. That was it. The stores were ugly and located in the cheapest real estate. Salespeople worked on commission. Sunday supplements didn't think about branding or service, only price.

By 2000, management didn't get what was wrong. One day the store was selling CDs and DVDs, the next it wasn't selling appliances. Stores were redesigned. Signage changed. Circuit City was mentioned in Jim Collins' book, “Good to Great,” as a model company and it went to executive's heads. What a fall it has been. There's new management at the company, but it is stumbling too. The reason? They've lost sight of what made them: sales, not marketing.

Some disagree, and think that the era of “sell it cheap” won't work in an era when Wal-Mart rules. I disagree. It's a challenge to buy electronics at Wal-Mart, and for bigger-ticket items, buying one at the same time I'm worried about drippy packages of hamburger meat just doesn't do it. In addition, because of the square footage, Wal-Mart can only sell so much. Most Circuit City stores are caverns. Compared with Broad Street in 1968, they have plenty of room.

A few suggestions from a customer who has observed the company for the last 30 years:

 1. Push loss leaders. Emphasize a minimum number of loss leaders in every category, with handwritten signs. Like the furniture chain IKEA (it has “impossible” prices), the pricing strategy of Circuit City used to be all about one low-priced item in every category. In the 1980s, there was an impossibly priced AM-FM receiver, a very cheap television, a very cheap refrigerator and the like in each category. The idea was and is not revolutionary.

2. Emphasize more “crack” products. In the store's heyday, they sold products that would lead you to buy more. A stereo system could start with a receiver, and then you would buy additional pieces. Today it works with things like the iPod. If a customer buys an iPod, you show them the multiple things they need to go with it.

3. Stop all branding and marketing. Circuit City has a place in the online Second Life and fantasy sports channel on YouTube. Waste of time. Ditch any ad that is not a direct call to action and price driven. It was price that brought people in. Branding is for mature companies that are not in a fight for their lives. Ugly ads sell.

4. Stop the pushy sales folks. They creep people out. We recall going to a store fairly recently and the goofus who was trying to sell us something followed us around. It was desperate, and it came after the commissioned folks were sent bye-bye (though some might have returned). In the old days, the commission folks were a little eager, yes, but they weren't desperate. But if pushy has to stay, please allow them to really haggle. It's no fun to have a Turkish market if salespeople can't dicker.

5. Middle market. Middle market. Middle market. Circuit City didn't always have snazzy brands. It was low- to middle-market, and was filled with receivers and such made by Superscope and Technics. I loved my Sharp cassette deck. Audiophiles were not amused, but who cares?

6. Quit the CDs, DVDs and such, except a few by the door in displays. You'll never compete with Borders and Barnes & Noble. The City also got burned because it pulled an edition of Mad Magazine from its racks that made fun of the chain. (The company later reinstated it). My question: Why does it sell magazines?

7. Sell anything plugged-in. Sell appliances, big ones. Sell small appliances and electronics. Sell toasters, and other things you plug in. As I recall, Circuit City was the place to get a cheap microwave oven, as well as a cheap college fridge. Circuit City was about things that plugged in. Today, appliances are made so cheaply that you have to buy things over and over again.

8. Sell appliances again. No, don't sell the Sub-Zero refrigerators (see No. 5). Sell entry-level pricing for cheap ovens, refrigerators, etc. Certainly the delivery system doesn't accommodate them very well, but deal with it. Setting up a bargain-basement appliance department will allow for new types of foot traffic. Anytime someone moves, they need new appliances. Husband goes into the store, sees pretty HDTVs and gets diverted. Circuit City might lose on the stove, but the customer will spend on the TV.

9. Encourage subvendors inside the store. Are there other leased businesses that can operate inside cavernous Circuit City stores? Delivery? Appliance repair? At press time, there was talk of Microsoft and a VISTA tie in. Smart.

10. Take advantage of the new technology. The upcoming television switchover is a once-in-a-lifetime opportunity. Don't miss it. Ditto with HD radio. I would love one, but have never been enticed or sold on it. What would get me in? Price. S

 Sarasota, Fla., writer Garland Pollard, a former reporter and editor for Style Weekly and Inside Business in Richmond, and former editor of The Richmond State and Virginia Living, edits the blog www.brandlandusa.com.

Opinions expressed on the Back Page are those of the writer and not necessarily those of Style Weekly.

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