Circuit City is about to be liquidated, which leads me to share a bit of wisdom from years and years of gadget lust: do not buy things from liquidated stores without doing a ton of research. Or just skip the research altogether, and don’t buy anything from them at all.
Liquidation sounds like a good deal upfront – twenty, thirty, forty percent off of prices that you wouldn’t have paid before, but with the caveat that the liquidation almost always results in hiked prices which are then discounted. Liquidation is a psychological game; it’s about the liquidating company making as much money as possible in as short a time as possible by convincing people they’re getting crap they don’t need at can’t-miss prices. And yes, the same company that did CompUSA is doing Circuit City’s liquidation (I believe), meaning that you should stay as far away from it as humanly possible unless you’re absolutely sure it’s a deal.
One thing that stands out about this is the realization that we’re going to be seeing a lot of commercial stragglers falling by the wayside this year. Circuit City, through tons of bad management decisions, had no real reason to be in business other than easy credit; it was a terrible place to shop and, from what I understand, an equally bad place to work. Offhand, though, I can think of a half-dozen big chains that are in similar shape. If it hadn’t been so easy to get a quick few hundred or few thousand in credit to spread out purchase prices over a year or three, they’d be out of business. And very likely, they will be soon. It’s been drastically underdiscussed, but a large part of the reason we’re going through economic contraction isn’t just because of unemployment or even the credit crunch itself. It’s because these stragglers depended on financing that overcame their lack of anything resembling consumer appeal, leaving them poorly suited to respond to any economic downtown or tightening of credit.
A substantial portion of our retail economy has been built on providing things that are, above all else, easy to buy. We don’t need them, we don’t even necessarily want them, but they’re there, and it’s nice to have them, and if it only costs $60 a month, interest free, surely that can be swung. It why Circuit City fired all of its employees that knew anything and thought that it could make it through based on extending credit lines so that nobody ever pays for anything upfront, ever. They didn’t need to run appealing stores, keep competent employees or even understand how to make money. They just had to understand how to make it really easy for anyone who came in the store to buy something, anything, and then toss a warranty on top of it.
What do we do with an economy that’s structured around people speeding up gratification and delaying the costs of said gratification for years at a time? Well, if this is any indication, we hurt, a lot, until it’s over. Huzzah.