Circuit City plans layoffs, hiring of less-expensive store workers

[Purveyor]

Source: Associated Press

RICHMOND, Va. — Circuit City Stores (CC) said Wednesday that it plans to cut costs by laying off 3,400 store associates and hiring lower-paid workers to replace them and by trimming about 130 corporate jobs.
Circuit City, the nation's No. 2 consumer electronics retailer behind Best Buy (BBY), will lay off store workers it said were earning "well above the market-based salary range for their role" and replace them with employees who will be paid at the current market range, the company said in a news release.

"We are taking a number of aggressive actions to improve our cost and expense structure, which will better position us for improved and sustainable returns in today's marketplace," said Philip J. Schoonover, Circuit City's chief executive.

The company also plans to outsource its information-technology infrastructure operations to IBM, a move that is expected to cut IT expenses by more than 16%. About 50 of Circuit City's IT workers will move to jobs with IBM and remain on the Circuit City contract. The other 80 corporate positions will be cut.



Read more: http://www.usatoday.com/money/industries/retail/2007-03-28-circuit-city-layoffs_N.htm

[ananda]

1. geez, at this rate..

.. I wonder that many people can afford to live.

[Auggie]

2. Why don't they just move all their stores to India?

[AnneD]

3. I went to a Circut City once....

just once. Their interest rates were preditory and the store just didn't feel right (or maybe I should say blue). I have never went back. If I go into the big boxs for electronics- Best Buy seems to treat their employees better. And these days, that is one of my criteria for shopping in a store.

[LeftyMom]

15. In the past I worked for both.

Best Buy paid much less and generally treated their employees like they were lower than shit. Turnover is much higher there. It's just that their corporate culture emphasizes perkiness over competence to mask the fact that they treat salespeople as a disposable commodity.

[AnneD]

17. Sorry to hear that...

the employees at our local store were telling me different. I usually buy at Costco though.;)

[fidgeting wildly]

19. I never worked at a Best Buy store, but

I worked at Sam Goody when they were bought by Best Buy. They treated us retail employees like utter crap. I quit soon after and have refused to shop there ever since.

[napi21]

4. OH GREAT! Hire some MORE of the ones who don't know a

damn thing, can't answer any questions, and even have trouble with the damn register!

I rarely go inside a Circut City store, but last year, when our TV was destroyed by lightening,we ventured out to find a replacement. I hadn't been paying much attention to new TV technology, so I didn't knowmuch about the choices, and the only thing I knew up front was that I wasn't willing to spend the money on HD yet, because in a few years they'll cost 1/2 of what they do now. I was astounded to find almost ALL the employees in "electronic stores" knew LESS than I did! I finally came home and researched the darn things on the net!

So it just stands to reason that Circut City should just hire some MORE of the incompetent people, huh?

[underpants]

14. "wage management initiative "

"We are taking a number of aggressive actions to improve our cost and expense structure, which will better position us for improved and sustainable returns in today's marketplace," said Philip J. Schoonover, chairman, president and chief executive officer of Circuit City Stores, Inc. "These actions represent the execution phase of the work initiated this winter to accelerate Circuit City's transformation. We expect to deliver improvements in our selling, general and administrative expense rate while maintaining appropriate investments to drive our key strategic initiatives such as digital home services, multi-channel and home entertainment.
http://news.moneycentral.msn.com/provider/providerarticle.aspx?feed=PR&Date=20070328&ID=6677555

Business Changes
Domestic Segment
The company has completed a wage management initiative that will result in the separation of approximately 3,400 store Associates. The separations, which are occurring today, focused on Associates who were paid well above the market-based salary range for their role. New Associates will be hired for these positions and compensated at the current market range for the job.

In a separate release today, the company announced that it has entered into an agreement with IBM to outsource its information technology infrastructure operations. The arrangement will result in a benefit to general and administrative expenses in fiscal 2008 and is expected to reduce planned information technology infrastructure expenses by more than 16 percent over the life of the contract. A total of approximately 130 Circuit City corporate Associates will be impacted by the change. Approximately 50 of them will transition to jobs with IBM and remain on-site serving the Circuit City contract. More details about the agreement are available in the separate news release.

[Occulus]

36. In their defense

I just bought a new DLP TV from Circuit City. Now, generally, I know my stuff when it comes to researching the differences between competing pieces of technology, but I wasn't sure which type of TV- LCD, plasma, or DLP- would suit my needs (gaming and PC inupt being the chief concerns).

I ended up getting a 1080p DLP set. :D But, it was the employee who sold it to me that sold me on the product. He knew 100% of what he needed to know. Frankly, it was a pleasant experience- he explained the differences between the effects of time on each set, any issues that each type of set had, and really pointed me right to the best set for my purposes. I also get 18 months same as cash to pay it off, which I should be easily able to do.

Now, had I heard about this firing scheme before I bought it (the firing announcement happened about a week after), I wouldn't have even set foot in there, and in all honesty I was very tempted to take it back, but I just can't bring myself to do so now that I already have the set :P Needless to say, though, I won't be going back into a CC for a long, long time... if ever.

[Gidney N Cloyd]

5. I like Circuit City but at least in the one near me there always >

> seems to be twice as many salespeople hanging around as necessary.

[Pale Blue Dot]

6. I am a retail manager for a national retail chain.

The retailer I work for has posted consistently positive numbers for the past decade.

Sales so far for the quarter have been 96% to budget. While nobody's pushing the panic button yet, there are many reasons for concern, the number one being that the value of our stock has barely moved for the past 5 years in spite of POSITIVE numbers. One negative quarter could have a huge negative effect on the value of our stock. Like it or not, value to shareholders is the primary metric that publicly-held companies pay attention to.

Thanks to Walmart, national retailers have spent the past several years trying to squeeze more and more profit our of the same products without raising the price. It's my believe that they have pushed this about as far as it can go without a)massive layoffs, and b)substantial price increases.

There is more anecdotal evidence that things are getting bad in retail. The retail portion of my state paper's job section has shrunk DRAMATICALLY over the past month.

How long can all of this go on before the industry, and our country, goes into a death spiral?

[havocmom]

11. Perhaps stocks are down due to small investers not able to invest

After seeing nest eggs go down the tubes from investments in giants like World Com and ENRON, it is hard for Wall Street to find enough patsies with some cash to hold up their pyramid.

Also, when US companies keep laying off US workers, there are not many CUSTOMERS to buy things.

The country is well into a death spiral. The too-well-compensated CEOs and Boards have made damned sure of it. Take the money, cut & run. That is their M.O. They do not give a shit about the results of their folly.

[bklyncowgirl]

40. It's tough to invest when everything you have goes to pay the mortgage. nt

[4dsc]

34. This is not the first company to do this

QWEST, CATEPILLER and many other companies have used this method to lower wages for the average worker.. Its because they have basically destroyed the union movement in this country that they are allowed to do this..

The sad thing is that they offer new employee's 1980 wages yet management keeps their 21st century wages.. Go figure..

[aquart]

7. I haven't been in there since I saw their red contributions.

Why should what little money I have go to Republican donors?

[Double T]

8. Circuit City just removed themselves from my suppliers list............

when corporations totally sellout their employees, they'll think nothing of doing the same to their customers. wall street, corporate america and their enabling investors will eventually get what they 'so richly' deserve..

[DCKit]

9. Besides the fact that I think they're about the sleaziest

company doing business today, it sounds exactly like what happened at Home Depot once a large hedge fund took control. Knowledgeable employees cost too much.

[Rydz777]

10. Call Bangalore for help

If you need any technical assistance, they'll put you on the phone to Bangalore, India.

[VegasWolf]

12. Meanwhile, bush is touting all of the McJobs created under his maladministration! nt

[winston61]

43. Uh, yeah, Bushes idea of job retraining is learning the phrase

"Do you want fries with that?" Ah, NAFTA, Globalization, it works for everyone!

[msongs]

13. they will end up like compusa if their service stays the same as it is now... nt

[Xithras]

16. Recently happened to my brother in law.

It's not new, and it's an ever-present danger when working retail. In his case, the suits decided to cut costs and fired everyone who had been employed longer than 18 months. This allowed them to re-hire new workers at the first step of the pay scale, trimming payroll while maintaining their workforce size.

[Prisoner_Number_Six]

18. They did that once before

and I haven't walked inside one of their stores since. It's been several years since they first did it.

I've NEVER been impressed with them- they seemed to have degenerated from quality products to Wal-Mart grade junk.

[Hugin]

20. Going down that time proven "Home Despot" path... eh?

:eyes:

Now I really have no reason to go to Circus City.

[daleo]

21. I don't suppose management took a paycut

Especially the CEO.

[tanyev]

22. But now those 3400 will have a chance to go to community college

and get edumacated for even higher paying jobs. That's what our Glorious Leader would say.

[Nikia]

37. There's a possibility that several of them had degrees

When my husband worked for another electronics retailer which included commission at the time, 75% of the salespeople had a degree of some sort.

[pinniped]

23. CC recently canned their best workers in favor of clowns who didn't sell as much.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2003/02/12/BU171481.DTL&hw=circuit+city&sn=001&sc=1000

Circuit City firing its best salesmen

Electronics giant Circuit City says it will improve its bottom line by firing thousands of employees and switching from commissions for salespeople to hourly wages.

The thing is, though, that to reduce payroll costs by about $130 million, Circuit City has given the boot to nearly all its top performers -- those who'd been pulling down the fattest commissions as a result of their hustle and hard work.

The remaining sales force is largely composed of workers previously paid by commission whose paychecks were relatively modest. They are, in other words, the company's least productive workers.
--------------------------

If the eCONomy gets any better, they will only be a presence on the internet.

[high density]

46. Wow, they are/were on commission?

When I go in to Circuit City there are usually plenty of employees milling around. It seems most of them either ignore the customers, or when asked for assistance, act like they would rather have me shop elsewhere. Their order online/pickup at the store process is pretty efficient, though, which is about the only way I'd shop there. The in-store 'experience' at Circuit City leaves much to be desired from my point of view. They've lost about $400 in sales from me in the past six months because I just get frustrated in their store and end up going elsewhere to buy what I need.

[Megahurtz]

24. And It Goes On and On.....

Corporate downsizing to the Fat Cat's advantage in Bush's America.
We are all meant to be exploited as Wage Slaves at the advantage
of those most precious "Stockholders" and CEOs.:grr:

[BootinUp]

25. Its a viscious cycle eh

Some day they will discover that their stores become less popular when they invest less in human resources.

[Judi Lynn]

26. For Circuit City staff, good pay is a bad thing

For Circuit City staff, good pay is a bad thing
The retailer cuts 3,400 who its says earn well above the going rate. They can apply for their old jobs -- for less pay.
By Abigail Goldman and Molly Selvin, Times Staff Writers
March 29, 2007


Circuit City Stores Inc. has a message for some of its best-paid employees: Work for less or work somewhere else.

The electronics retailer on Wednesday laid off 3,400 people who earned "well above" the local market rate for the sort of jobs they held at its stores.

In 11 weeks they'll be able to apply for their old positions — which will come with lower hourly wages.

The move put Richmond, Va.-based Circuit City, which has more than 40,000 employees in the United States, at the forefront of a new way of controlling labor costs in the service industry. Employers determine the prevailing market wages for particular jobs in various geographic regions and then find ways to make sure that their workers' salaries stay within that range.
(snip/...)

http://www.latimes.com/business/la-fi-circuit29mar29,1,2472000.story?coll=la-headlines-business&track=crosspromo

[superconnected]

27. If circuit city gets away with this, can't all employers?

They certianly will try.

[lanlady]

28. Circuit City lost my business

years ago, when they began replacing knowledgeable salespeople with untrained kids. It's happening everywhere, though. Pretty soon I won't want to shop anywhere, except maybe Costco and Whole Foods. My local supermarket, Giant, seems to have replaced its entire staff. Gone are all the friendly long-time employees I used to see at the registers and in the aisles year after year.

[Sin]

29. you have people at your registers.

Your lucky at my Giant they have like 10 normal registers maybe 2 that are open Usually one, the 4 self checkouts are always open manned by 1 Overseer as i like to call them, I Don't know why they just don't buy a Asimo to watch the station.

[Justice]

30. Seems pretty stupid to announce this - makes me say, I don't think I will shop there

because the workers won't know anything about the electronics.

[Jeff In Milwaukee]

31. They're going to hire people who know LESS about electronics

...than their current employees?

Who are they hiring, Amish?

[douglas9]

32. Great Work Enviroment?

Sure they will be flooded with applicants......

http://www.circuitcity.com/cccareers/about/why_cc.html

[hollowdweller]

33. Why the hell the US doesn't have a retail employees union is beyond me

Sales jobs are the only ones that cant' be moved overseas. I'd dearly love to see a national retail workers strike to hit some of these fuckers in the wallet!

[douglas9]

39. They Do Have...........My Old Union............RCIU

http://en.wikipedia.org/wiki/Retail_Clerks_International_Union

http://www.ufcw.org/about_ufcw/where_we_come_from/industries/retail_clerk_history.cfm

[Chovexani]

35. Circuit City discriminates against women

I applied for a commission sales job there a number of years ago at a job fair at my mom's church. Despite being extremely knowledgable about computers and having experience doing the exact same thing at Sears, they never called me back. Another woman who was there, similar situation, was offered a much lower paying cashier job.

When the store opened, I was curious and went in there. Nothing but men in the computer department. Nothing but women as cashiers. To add insult to injury, I posed as a customer wanting to buy a computer, and a) didn't receive help until I asked someone, and b) the guy didn't know what the fuck RAM was when I asked him how much a particular configuration had.

...did I mention I do my electronics shopping almost exclusively at Best Buy?

[Nikia]

38. What they don't realize is that by paying above market value

That they were more likely to get the best employees in that area. When an employer pays above average, they are more likely to be able to be picky about who they hire, are more likely to retain good employees, and motivate employees to contuinue to do a good job because they know that they are unlikely to be able to find better paying jobs. When an employer pays average or below, the employer has less choices about who to hire and the best employees are more likely to leave for a higher paying employer.
I can't believe that companies do not understand this.

[Nickster]

41. Sure they understand that, but they need the short term bump in profitability to make the

shareholders happy. If more companies follow suit, then they will start to have a pool of better employees to choose from simply because of the lack of good paying jobs all around.

[winston61]

42. They understand it all right,

they just don't give a shit. Stupid employees, high turn over, customer dis-satisfaction, these are just part of the cost of doing business. Greedy executives and share holders demand more money and the easiest way to deliver is to cut costs in labor.

[Nikia]

44. It can be more costly to have bad employees

Especially in their case if they are letting higher paid good employees go because the companies sales are down and they are laying off salespeople with above average sales records.
They are gambling in assuming that the amount that they will save in labor will make up for their decrease in sales, which is likely to result. Even if they could save a little money in the short term, they will decrease their reputation and market share in the long term resulting in lower profits. Eventually, they will have to close stores and maybe even declare bankruptcy. These things are not in the executives or shareholders best interests either.

[winston61]

49. It is still all down to greed-

which is blind and deaf and marches hand in hand with it's companion- stupidity. Let the companies collapse- for these execs there is always another job at another company to wreck. They will still bail out with the golden parachutes. The concepts of quality and service are considered too expensive these days. Condition consumers to believe that there is no such thing as a durable or repairable good. Write Wal Mart a thank you letter for that.

[Triana]

45. I haven't read the entire story but...

...my Mom said they told the workers they're laying off that they could hire them back - after 10 months - at the lower pay rate.

Is that pissin in someone's face or WHAT?

The NERVE of these corprats. This practice, bytheway, ought to be ILLEGAL.

[reprobate]

47. My email to Circuit City on the subject.

"We are taking a number of aggressive actions to improve our cost and expense structure, which will better position us for improved and sustainable returns in today's marketplace," said Philip J. Schoonover, Circuit City's chief executive.

Will someone please tell old Phil that CC's current sales force leaves so much to be desired that firing them and hiring lower paid workers is, in effect, a race to the bottom.

I have been in a CC store several times in the last year. The one thing I can say that these visits have in common is the inability of a customer to find a sales person to be of help. And if one can be found by aggressive customer action, it's two to one that salesperson knows nothing about the item the customer wants to know about.

Tired of being number two in an industry of two? The best and quickest way is to SERVE THE CUSTOMER!

Want to increase return to the sareholder? SERVE THE CUSTOMER! As an owner of Circuit City shares I very much fear that the present course will result in very much LOWER customer satisfaction, and THAT will always result in lower sales, which mean lower return to me as a shareholder.

Please remember one thing: You are no more than a glorified retail operation. Your main job is to insure a satisfied customer. Lose sight of this one imperative and you will lose that customer. Lose the customer and you lose the shareholder.

[winston61]

50. This goes all the way to the top-

Any retailer is now nothing more than a shop selling new junk. Products are designed and expected to fail. Condition the consumer to expect nothing because that is what they are getting. The landfills are rapidly filling up with crap from Circuit City, Best Buy, Lowes, Home Depot, Target and the daddy of them all, Wal Mart. Lowest price is the goal, because as soon as you walk out the door with your purchase it is worthless.

[JPZenger]

48. They lost my business

The people who were fired had earned a better income because they had been successful in commission sales for the company when the company used commission sales. If they weren't paying their way, they could have given the higher income employees the choice of going back to commissions.