• Abstract and Figures
• Public Full-text

This material is exclusively prepared for Ringle Customers Material for your English session Circuit City: The formula of past successes can’t be forever [source: https://asia.nikkei.com/Spotlight/Cover-Story/How-Asian-companies-are-navigating-the-trade-war] 0 본 자료는 저작권 법에 의해 보호되는 저작물로, Ringle 사에 저작권이 존재합니다. 해당 자료에 대한 무단 복제/배포를 금하며, 해당 자료로 수익을 얻거나 이에 상응하는 혜택을 누릴 시 Ringle 과 사전 협의가 없는 경우 고소/고발 조치 될 수 있습니다. This material is exclusively prepared for Ringle Customers [Summary in English] I. Circuit City Circuit City, once the top retailer of electronics in America, failed to adapt to a changing market economy. Clinging to its past successes and old strategies, Circuit City eventually declared bankruptcy in 2008. • Once a Fortune 500 company and America’s leading retailer of electronics, Circuit City (CC) repeatedly failed to address the company’s internal issues and made poor business decisions, ultimately losing out in every aspect to their innovative competitor, Best Buy. CC obstinately persisted in their old formulas for success, not anticipating how quickly e-commerce companies and competing distributors would encroach on their market. Though CC had once been one of the most innovative companies in North America with 1,500 stores across the U.S. and Canada, they filed for bankruptcy protection in 2008. • Having been unable to find a buyer to take over the bankrupt company after a year, CC sold its assets to Systemax for $14M. Systemax also acquired CompUSA and opened tigerdirect.com, after which CC almost completely disappeared into history. In 2015, Systemax sold the Circuit City brand to a distributor named Ronny Shmoel, who began planning for its relaunch. • However, even given two more years, CC still failed to [1] stake a claim in the fiercely competitive market, which had already been all but cornered by Amazon—an absolute powerhouse even then—its surviving competitor Best Buy, and finally Target and Walmart, both of which specialize in certain electronic products. Then on February 15, 2018, at the Las Vegas Consumer Electronics show, Shmoel announced his plans to open a variety of brick- and-mortar CC stores alongside their online sales channel. Opening in 1949 as a TV retailer in tangent with a television broadcasting network, Circuit City was the first to introduce the ‘big box’-style electronics store in the 1970s; it eventually grew into the largest electronics retailer in the U.S. • In 1949, after hearing at his barber shop of plans to open the first TV station, a man named Samuel Wurtzel immediately rented out a local tire store and began selling television sets. Taking the first initials of his family members’ names, he created the Wards Company. Wurtzel both rented space in large discount stores across the United States and opened his own stores, leading to the Wards Company’s rapid growth. 1 본 자료는 저작권 법에 의해 보호되는 저작물로, Ringle 사에 저작권이 존재합니다. 해당 자료에 대한 무단 복제/배포를 금하며, 해당 자료로 수익을 얻거나 이에 상응하는 혜택을 누릴 시 Ringle 과 사전 협의가 없는 경우 고소/고발 조치 될 수 있습니다. This material is exclusively prepared for Ringle Customers • Throughout the 1960s and 70s, Wurtzel kept expanding existing stores and acquiring new stores, continuously bolstering the company. He overtook retailers in various other sectors, including household goods, clothing, automotive products, audio equipment, and furniture. However, the U.S. economy suddenly and drastically shrank following the 1973 oil crisis, and consumer demand plummeted along with it. When they recorded operating losses in 1975, Wards Company withdrew from its slumping retail stores and began to reorganize its portfolio. • In 1977, Wards Company [2] revamped their retail model, now selling famous brands of audio and video devices at larger stores. In 1984, they changed their brand name to Circuit City and went public on the New York Stock Exchange. Beloved by customers, the big-box style store became CC’s trademark, and they rapidly opened a number of new locations. By opening multiple stores all within 500 miles of their distribution centers and by streamlining their fixed costs such as marketing, logistics, and inventory, CC made it nearly impossible for competing retailers to enter the market. Using these strategies, CC was able to achieve the highest market shares in a given region while also exacting higher prices from consumers. II. Winning Strategy Circuit City provided differentiated services, including an extensive range of products, lowest price guarantees, repair services, and a professional staff. Because each store was granted independence in choosing their product offerings while purchasing capabilities were centrally integrated, CC was able to simultaneously achieve economy of scale and offer local specials. • CC used more than half of its locations for retail, storing most of its inventory in separate warehouses. Customers were able to browse various electronic goods with the assistance of sales staff in a spacious and pleasant environment, and if they made a purchase, they would go to a pick-up location to retrieve their purchased products. Customers went wild about CC stores, where they could handle a wide variety of brand name products and receive expert assistance from CC employees. • With their lowest price guarantee, CC offered a 110% payout for customers who found and reported lower prices elsewhere for the same products. Along with CC’s strategy of opening multiple stores in the same region to cut off competitors, at a time when it was not possible to [3] scour the internet for transparent prices, it was very difficult for customers to find lower prices than what CC offered, whether or not those prices were actually the lowest. This system was a highly effective sales tactic for CC. 2 본 자료는 저작권 법에 의해 보호되는 저작물로, Ringle 사에 저작권이 존재합니다. 해당 자료에 대한 무단 복제/배포를 금하며, 해당 자료로 수익을 얻거나 이에 상응하는 혜택을 누릴 시 Ringle 과 사전 협의가 없는 경우 고소/고발 조치 될 수 있습니다. This material is exclusively prepared for Ringle Customers • CC created service centers inside their stores which provided repair services and kept customers coming back. The head office consolidated product purchases for all stores, thereby minimizing the unit purchase price, but gave each individual store discretion to determine the types and prices of products to be sold according to local demand. CC also incentivized its employees to make sales by paying commissions. When sales declined due to the economic recession and credit restrictions, CC established its own bank, issuing credit cards to customers and expanding its stores aggressively to maintain their market share in the face of stiffening competition. • For the 40 years following the mid-1970s, middle-class income in the U.S. remained within the same range while various expenses, such as healthcare, steadily increased. despite the continuous decline of American consumers’ disposable income, consumption and consumer debt increased with mechanized vigor during the same period. • Because many consumer electronic products are purchased by means of debt (credit cards or loans), interest rates have a significant influence on product sales. during the recession, credit card companies and lenders raised interest rates while reducing the availability of loans, which led to drops in sales for retailers such as CC. Technology is also a critical factor—when a new product emerges, retailers can, for the first few years, maintain a monopoly and exact high prices for it, but as the product becomes common over time, the price drops. These elements make the consumer electronics sector particularly volatile. • In 1990, interest rates soared to 11.5%, and Barclays, which had previously provided credit to CC’s customers, limited lending. At the same time, Best Buy eliminated their warehouse storage system and loaded all of their products into their retail stores, posting detailed instructions and information on displays. With the introduction of their new ‘low service, low price’ concept, Best Buy cut back on their employees, significantly reducing sales and administrative expenses and eliminating employee commissions. • CC on the other hand, continued to expand aggressively in the same manner it had in the past, attempting to keep its hold on the market through the economic downturn by establishing its own bank and issuing credit cards to customers. But with the emergence of specialized retailers such as Home depot, and with the entry of retailers like Wal-Mart into the consumer electronics field, competition was intensifying. CC tried to maintain its market share by opening 30-40 new stores every year despite the recession and competition, and its profitability continued to steadily decline. 3 본 자료는 저작권 법에 의해 보호되는 저작물로, Ringle 사에 저작권이 존재합니다. 해당 자료에 대한 무단 복제/배포를 금하며, 해당 자료로 수익을 얻거나 이에 상응하는 혜택을 누릴 시 Ringle 과 사전 협의가 없는 경우 고소/고발 조치 될 수 있습니다. This material is exclusively prepared for Ringle Customers III. The Fall of Circuit City Thanks to the popularization of PCs, Circuit City did manage to briefly reach an unprecedented level of growth. Following the formula of its past successes, CC continued to streamline its assets by expanding stores, diversifying its fields of business, and selling real estate. • With the advent of PCs and the growth of the music industry, CC had reached a new point of change in its growth by 1992. Previously, by economizing its scale and forestalling competition by opening several stores in one area, they had been able to open more than 50 stores each year. To foster that growth, CC first monetized its assets by selling or leasing its properties, then expanded its advertising and promotional operations. • With an eye towards long-term growth, CC attempted to diversify its businesses.

Load more

  24

Copy Link