Circuit City is, of course, imploding. They decided to reduce costs by firing the higher-paid salespeople at their stores.

Kevin Hillstrom at The MineThatData Blog asks whether Circuit City is correct when they state:

“There is no data in the company’s analysis that the service level has dropped due to the absence of the top paid employees.”

There’s no way that Circuit City can provide the same level of service. CompUSA tried the same thing when faced with competition from Best Buy. Now they’re closing some 50-odd stores around the US.

If I were Circuit City, I’d do three things:

1. Hire the best salespeople I can find.
2. Do a once-a-week, one-hour training session in every store where salespeople get to learn about the latest technology. Make the stereo people listen to a talk about WiFi. Make the computer people listen to a talk about HDTV. Make all of my employees enthusiasts.
3. Host a series of “we want you back” events. Invite customers to come meet the staff, tour the stores, and enter for a free HDTV or some such.

Right now, Circuit City is entering a race to the bottom. Best Buy, Fry’s and web-based retailers like Amazon have more cash in the bank. They’ll win that race. So start a new race, based on top-quality service and an enjoyable shopping experience.

Oh, and if the problem is cash, close stores and consolidate. Then follow the 3 steps.