Are Customers Abandoning Circuit City Over Cuts?

With Circuit City, a year after mass layoffs, posting a $200 million loss, the question is being raised- are the troubles happening despite the massive job cuts, or because of them?

Circuit City let go of 3,500 employees, most of whom were sales associates, in March, giving some of them the chance to come back at a reduced salary. The goal was to cut costs, but the result seems to have had unintended consequences- namely, that customers are fleeing in droves to Best Buy and other competitors. This is especially true with regards to big-ticket electronics items, which often require expert sales help.

According to an Associated Press piece published Friday, after the layoffs of the majority of experienced sales associates, “shoppers quickly noticed and fled,” realizing that service matters in electronics retail. This resulted in the company’s double-digit holiday losses, as well as the $200 million quarterly loss.