Ex-CEO recounts rise and fall of big retailer
WINCHESTER — Alan Wurtzel has a viewpoint on the rise and demise of a retail giant that few people can match.
And he had enough curiosity about the inglorious end of Circuit City, heralded in 2001 as one of America’s best companies, to write a book about it.
“I wanted to understand,” he told a group of about 150 people at Shenandoah University Monday night, ”what happened to Circuit City.”
Speaking as part of the Byrd Distinguished Lecture Series at Shenandoah University’s Harry F. Byrd Jr. School of Business, the former Circuit City CEO gave his audience an abbreviated glimpse of the company’s 60-year arc from a single store selling black-and-white televisions in Richmond to a $13 billion business at its peak to bankruptcy.
The full story is captured in Wurtzel’s recently released book, “Good to Great to Gone: The 60 Year Rise and Fall of Circuit City.” In addition to recounting his experiences with the company, he interviewed everyone from former employees to former suppliers and read newspaper articles and company reports to learn why things fell apart.
The company his father, Samuel, founded was built with an emphasis on savings, selection, service and satisfaction, Wurtzel said. Samuel read demographic and technological changes in the early 1960s, saw how discount stores would revolutionize America and jumped in as a major appliance and electronics retailer.
As CEO, Wurtzel said he spent quality time on strategic planning. Every other year, he took a month away from daily operations to develop a three-year plan for Circuit City.
From 1982 to 1997, Wurtzel wrote, Circuit City’s stock price outperformed the overall stock market by 18.5 times, “far better than any other Fortune 500 company for any 15-year period since 1965.”
That performance was discovered by author Jim Collins. He found only 11 companies that outperformed the market by three times or more for a period of 15 years and profiled each in his 2001 book “Good to Great: Why Some Companies Make the Leap ... and Others Don’t.”
But by early 2009, a bankruptcy judge forced Circuit City to close, including its Winchester store.
Wurtzel, who began working for the company in 1966 and was its CEO for 13 years and a board member for 14 years, had left the company well before the end. He’d sold all of his Circuit City stock years earlier.
But he said that based on his research, he thinks the key factors in the company’s fall were a failure to alter its model of having each customer waited on by a commissioned salesman, the elimination of low-margin products that brought young people to stores, inability to develop and stick to a bold business plan and persistent stock buy-backs.
“They spent nearly $1 billion buying back stock,” Wurtzel told the audience. “They should have spent that money remodeling stores, improving inventory.
“When 2008 hit (and the economy faltered), the cupboard was bare. There was no money in the bank. They couldn’t buy goods for Christmas.”
Wurtzel said he doesn’t know if Best Buy, the nation’s major brick-and-mortar electronics company, can survive in a market influenced more and more by online retailers such as Amazon.com Inc. He thinks Best Buy should place additional emphasis on its Geek Squad service department — something Amazon.com can’t provide — and should provide impartial product advice for a fee that would be deducted if the customer buys the item at that time.
The bottom line for success, Wurtzel said, is service.
“Focus on the customer, focus on Main Street,” he said. “If you do well, Wall Street will be knocking on your door. You won’t have to go after them.”
Wall Street-types apparently weren’t viewed kindly in the Wurtzel household.
“My father used to call Wall Street people prostitutes with top hats,” Wurtzel said. “They were there to make a buck, not to help the people they were working for.”
Wurtzel and his wife, playwright Irene Rosenberg Wurtzel, have close ties to SU. He was presented an honorary doctorate in 2005, she is a member of the university’s board of trustees, and the couple has made important financial contributions to the school.
— Contact Vic Bradshaw at email@example.com