Restructuring / Turnaround Strategies Case Study

Circuit City's Turnaround Strategies: Can the ex-Numero Uno Bounce Back?

Abstract:
In the 1980s, Circuit City was the leading retailer in the US consumer electronics market. But by the mid 1990s Circuit City had lost its market position to Best Buy. To regain its position the company started its turnaround plan that included upgrading merchandising, improving its advertising and promotion, organising training and cutting costs. Despite this, Circuit City was unable to gain back its position. To combat Best Buy and to regain its top position in the US consumer electronics market, Circuit City followed Best Buy's strategy of self-service store format and recruited a non-commissioned sales force. In 2005, though Circuit City witnessed initial sales growth, analysts were sceptical of long-term growth. Some of the industry observers opined that Circuit City lost productive sales men during this exercise where as some others felt that Circuit City was right in doing so and felt that Circuit City should also adopt Best Buy's strategy of store-segmentation. By the end of 2006 the company opened 59 stores in the different locations of the US and also planned to open 20 stores by 2007. But the question remained - Would imitating Best Buy help Circuit City in its turnaround effort and to gain back its position?

Pedagogical Objectives:

• To analyse the competitive strategies of the US consumer electronics market
• To analyse the turnaround strategies adopted by Circuit City
• To analyse how replication of a competitor's business strategy can be used as a tool for growth.

Keywords : Circuit City; Restructuring - Turnaround Strategies Case Study; Best Buy; self-service store format; non-commissioned sales people; advertising; training; Wal-Mart; consumer behavior; hourly wage; business strategy; dynamics of consumer electronics market; Circuit City vs Best Buy; competitive differentiation