Today’s Wall Street Journal is reporting [paid sub required] that beleaguered retailer Circuit City (NYSE: CC) is firing almost 3500 employees with the intent of replacing them with less skilled workers. As the WSJ explains:
“Circuit City Stores Inc. announced a new wave of cost-cutting efforts as it battles larger, more efficient retailers amid intense competition for sales of flat-screen TVs and other electronics. The Richmond, Va., retailer said it will replace 3,400 mostly store-level employees with lower-paid workers…”
This is a phenomenally stupid move for the company, I must say. Think about it…
When was the last time you went into a so-called “big box” consumer electronics store? I’m talking about Circuit City, but I’m also talking about Best Buy (NYSE: BBY), CompUSA and even some of the newer Wal*Mart (NYSE: WMT) stores too.
What do they all have in common? Customers who are asking questions and are overwhelmed and befuddled by the complexity of modern electronic gadgets, be they DVD players, personal mp3 devices or large-screen plasma or LCD TV sets.
Strategically, Circuit City is really shooting itself in the foot with this change and unless it’s handled ever so carefully, they’ll find themselves competing even more directly with the discount stores (think Sams Club) and online retailers (prime among them being Amazon.com). After all, if you can’t ask questions of their sales staff, you’ll have to do your homework at home, online and by talking with friends and colleagues. And at that point, yes, everything will have dropped down to being just a commodity and there’ll be no point in buying local when they’re all completely clueless anyway.
As I said recently to a reporter for USA Today:
“The most interesting thing about this isn’t the effect on the workers but the fact that Circuit City is basically sealing its fate by getting rid of the smart people. I mean, what would make you choose to go into a retail establishment to buy a large piece of consumer electronics? Someone who can *answer your questions*. Sounds to me like that’s going to be an exceedingly rare commodity in Circuit City down the road, and that’ll mean that they won’t be much better than, say, Sams Club or any of the zillion online CE retailers.”
How do I think you could handle this staff transition? By taking a page from the Apple Store (Nasdaq: AAPL) playbook and having “geniuses”, one or two employees available any time the store is open who are specially trained in the newest technologies, flown to the Consumer Electronics Show each year and perhaps even exposed to unreleased technology, all so they can be “the answer guys” for the store. Offer up someone who does have the answers and you can mitigate a lot of daft employees who are just filling shoes on the floor.
What do you think though, dear reader? Have you ever found useful, well informed and knowledgeable employees at a local Circuit City and do you think replacing them with lower cost / less knowledgeable staff is a good strategic move for the ailing firm?