Not long ago, I addressed the issue of the decision by Circuit City, the nation’s #2 consumer electronics retailer behind Best Buy, to fire 3,400 retail workers because they’re making too much money! Nearly every business magazine and newspaper in the country reported the story, providing the giant retailer with a great deal of publicity. Few reporters said yea or nay about the controversial decision. Most took a “wait and see” stance.
Upon reading the news release, I struggled to understand how anyone in a leadership role could compare the savings derived from such a strategy to the enormous loss of revenue that could possibly evolve from disgruntled customers who might feel this approach to be unethical. Add that to the possible long-term loss of sales resulting from a less experienced and less motivated staff and there could be trouble on the horizon. On the other hand, I could very well be wrong as I have never been the CEO of the nation’s #2 consumer electronics retailer. I must assume that all possible scenarios were closely examined and evaluated before such a crucial decision was made. However, I could be wrong there as well.
Here’s an interesting update. The Associated Press announced end-of-the quarter figures for both Best Buy and Circuit City:
Best Buy reported an 18.5 % increase in their quarterly profit with earnings of $763 million. Best Buy revenue rose 21 % to $12.9 billion.
Circuit City Stores, Inc. said it lost $12.2 million in this quarter.