Let me begin this post by making it clear that I feel nothing but empathy for those who are losing/have lost their jobs in the shutdown of these two companies. I also feel some regret for the families of the founders as in both cases they remained part of the business until the very end.
I also certainly agree that the economy played a role in the shutdown and just to satisfy the anti Bush crowd that his policies contributed to the economy (with that I hope we can save the ‘who is responsible for the current economy debate to another column).
However in looking at these two businesses I cannot help but reflect to what degree they contributed to their own demise. When I was a kid (not that long ago) I remember my mom regularly taking us to Mervyns for school clothes. She did so because they provided reasonably good quality products for a decent price.
Similarly, as I got older and into my own mode of buying I made a habit of going to Circuit City because they were well stocked, efficient and knowledgeable about the products. The prices were not spectacular but they were good enough.
However over recent years both companies had a serious decline in quality. Well before the economy started to slide these places started to sell poorer quality items and their pricing did not adjust to reflect that. Also the quality of service dropped off a great deal.
I’m sure there were many reasons for this and perhaps that reflects a broader switch to more of an internet economy (after all Tower Records shut down when the economy was booming).
But it is worth reflecting to what degree these places shut down because of their own failings, if for no other reason that because when the economy improves we will want to try and cull these problems from other companies.