Circuit City: Passing on Best Buy, Dumping Appliances and the MAD Parody

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In 1949 Samuel Wurtzel watched television reach a Richmond, Virginia barbershop, moved his family there and opened Wards Company. His son Alan Wurtzel took over in 1975 and opened Wards Loading Dock, a warehouse showroom that put stacked inventory in plain view, renamed the Circuit City Superstore in 1978. The company became Circuit City Stores in 1984, listed on the New York Stock Exchange, built red tower entrances for its 1985 push into Los Angeles, and relied on a trained, commissioned sales staff under the slogan Where Service Is State of the Art. In 1988 CEO Richard Sharp declined to buy regional rival Best Buy for $30 million.

In 1991 it launched CarMax, later spun off for over $1.2 billion, but its 1997 DIVX discs, which expired after 48 hours and required a phone line, cost $114 million to shut down. In 2000 it walked away from $1.6 billion in annual appliance sales and spent $1.5 billion remodeling stores, just ahead of the housing boom. In 2003 it eliminated commission sales and cut 3,900 experienced salespeople; in 2007 it laid off 3,400 more and offered rehiring at lower wages after 10 weeks. In August 2008 executives ordered stores to pull a MAD magazine issue mocking the chain for always sitting next to Best Buy. It filed for Chapter 11 that November, converted to Chapter 7 liquidation in January 2009, and 30,000 employees lost their jobs.

• The appliance exit came with an exclusive video game deal with Sony that left out Sega and Nintendo.
• A 2004 Verizon Wireless exclusive halted sales of other carriers as cell phones boomed.
• Circuit City paid $284 million for InterTAN, then lost the right to use the RadioShack name in Canada.
• Blockbuster made a buyout bid of over a billion dollars during the bankruptcy, then withdrew it.
• Systemax bought the brand and website for $14 million, and the Richmond headquarters appraised at $46.2 million sold for $3 million.