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CIRCUIT CITY REWIRES

BY POOJA PATNAIK, SILPA PATTNAIK & DEBI PRASAD SAHU

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Company Overview

Established in the year 1970s in the name of WARDSNamed CIRCUIT CITY in 1980.

Electronics retailer offering: Consumer Electronics T.Vs and Stereos CD and DVD

Others (Banking & Used Car Dealership)Market served Households Small businesses

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Company Overview

Business Strategy Customer Focused Business Strategy

Key Goals and Objectives Knowledgeable sales staff Superior customer service Focus on personnel Customer Centric Services

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M ARKET POSITION

Industry Circuit City is 2 nd behind Best Buy

among industry competitors 3 rd behind Best Buy and Wal-Mart in

sales and overall market shareSegments

E-tailing Specific retail stores Wholesale retailers

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M AJOR RIVALS

Top Competitors Best Buy product differentiation Dell product differentiation Wal-Mart cost leadershipPositioning against rivals Lagging behind competition Stuck in the middle

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KEY STRENGTH

Strong IT infrastructure that makesinformation readily accessible to decisionmakers.

Customer Focused Business across allchannels.

Proprietary Point of Sale System (POS)

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W EAKNESSESS

STORE LOCATION Low Catchment Areas. Resulted in closing down of 19 stores. Trying to save money in the form of

rents.

STORE SIZE Less Floor Size than competitors. Smaller Product Line.

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CONTD.

DATA ORGANIZATION- Difficult to access key data

Adding more to its problem, the pursuingof non-core business thereby distractingfrom its core business.

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CO M PETITIVE ADVANTAGE

POS SYSTEM

COMMISSION BASED COMPENSATIONSTRUCTURE.

FIRST RETAILER TO ALLOW CONSUMER

TO CHECK LOCAL STORE INVENTORIESONLINE.

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INTERNAL ANALYSIS

Strengths & Internal resources Improved leadership Reputation Technical Support

VRIO assessment of resources Leadership (value)

Philip Schoonover (Best Buy)

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INTERNAL ANALYSIS CONT.

Reputation (rare, hard to imitate) Well known product line Knowledgeable staff High quality of customer serviceTech Support Team (rare, hard to imitate) FiredogOrganizational Structure Bottom up mgmt

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DE M ERITS OF POS SYSTE M .

OLD & COMPLEX.

HEAVILY CUSTOMISE.

VERY SLOW & PRONE TO FREQUENTCRASH.

VERY COSTLY TO MAINTAIN.

LACK OF PROFFESIONALS.

LACK OF FUNDING TO UPGRADE.

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FAULTY SELE CTION OF LO CATION

Choosing 2 nd tier location in order to saverent.

Constantly loosing of market share

Focusing on looks of the store rather than

location of stores.

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DATA DILE MM A

Due to abundant data, it is unable toleverage data to improve the customer experience and boost revenue.Disintegrated data in different format of information is not always reliable.Due to lack of authentic data, allocating of goods becomes a huge problem, whichresults in overstock. This leads to over stock and drives up the operating costs.

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CONTD.

POOR FORECAST

ABSENCE OF BUSINESS INTELLIGENCE &CUSTOMER ANALYSIS.

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STRATEGI C DIRE CTION

BUSINESS STRATEGY Regain market share Short-term competitive advantage Lacking innovation

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EVALUATION OF STRATEGY

Is Circuit City taking advantage of opportunities?Does the strategy fit with what is going onin the external environment?Is Circuit City likely to continue to besuccessful?

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RE COVERY STAGE

It has sold off all of its noncore businessesto focus on its core.It has changed the pay structure for in-store employees, has begun relocatingstores .the company started to hone its customer-

centric strategy.

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CONTD

It is already improving the customer experience in its stores by, among other things, locating accessories and services

close to big-ticket items.Circuit City is also making merchandisingdecisions based on whats important to thecustomer.Customer-focused strategy requires aconsiderable change management effortinside the company.

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CONTD

To speed the change management effort,the company has to give training tooperational staff to participate in decision

making process.

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Qu esti on s?