Bread and Circuits

Jared Bernstein offers a fanciful take on the recent Circuit City layoffs: Short Circuit, including a link to the chain's own press release. The company's prose is as crooked as their twisted little hearts:

The company has completed a wage management initiative that will result in the separation of approximately 3,400 store Associates. The separations, which are occurring today, focused on Associates who were paid well above the market-based salary range for their role. New Associates will be hired for these positions and compensated at the current market range for the job.

Bernstein, rightly, marvels at the audacity of announcing this in a press release:

Given the times, their rationale for making big changes made sense. Their stock price … was off by a third. But, despite their claims to the contrary, their workers already made the pretty low market wage of about $11.50 and hour, and it was clear at the time their tactic was a recipe for lousier service, fewer sales, and lower profits. …

What's amazing here … is that the firm though it was a good idea to advertise this practice. They were a retailer, with stores in people's neighborhoods, not some behind-the-scenes player. Did they really think this was the message consumers wanted to hear? Did they really believe people would shop at a place where their fellow citizens were treated this way?

I have long complained about the narrow, shareholder-focused tunnel vision of the Business section in most newspapers. Corporate decisions that affect millions of consumers are reported on from the perspective of how those decisions will affect mere thousands of shareholders. This is a foolish, self-defeating way to try to sell papers.*

This same focus is reflected in Circuit City's press release, which boasts — boasts! — that the company is willing to screw over its best workers and its customers in an attempt to bump up its share price.

Bernstein notes that many people are likely to choose not to "shop at a place where their fellow citizens [are] treated this way." I've heard that very reaction — and not just from fair-trade, eco-friendly, organic-everything liberal types. These layoffs are an insult to consumers' sense of fairness.

That insult is a mistake, but it might not be a fatal one, since consumers are not primarily driven by a sense of a fairness to others. The larger mistake, and the more direct insult to customers, is the other point Bernstein makes, that by firing all of their most experienced and most knowledgeable staff, Circuit City has created "a recipe for lousier service." The press release does not say that the chain is cutting back on customer service in order to pass the savings on to consumers. They're cutting back on customer service to pass the savings on to shareholders.

Lousy service + same prices + unfairness to others is a foolish, self-defeating way to try to sell electronics.

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* Consider, for example, the news that taking Vioxx involved greater-than-reported risk of heart failure. That was really big news for the many consumers who were taking the drug, but there were no headlines reading, "You Might Be in Danger of Heart Failure." Instead, there were dozens of headlines reading, "You Might Want to Sell Your Shares in Merck." The "you" of the second headline referred to a much smaller group, and carried a much less urgent message, but that's (stupidly, indefensibly) how the Business section works. The much larger group, which needed to hear a much more urgent message, was forced to read between the lines in dozens of shareholder-focused stories that didn't so much bury the lede as render it tangential to what they believed was most important: how increased risk of heart failure would affect share prices.

  • Jeff

    Bernstein notes that many people are likely to choose not to “shop at a place where their fellow citizens [are] treated this way.”
    Some might, but as can be seen from the success of Wal*Mart, not enough to make a significant difference. American consumers will seemingly put up with shoddy goods sold by incompentent staff in order to save a few pennies.

  • DavidD

    At first I was going to comment on the unstated premise here that it would be better for Circuit City to screw over their lower paid workers like some other company would than lay off their better paid workers as they announced. Then there’s also this fantasy that business sections are the only place where consumers can find news. I remember stories of excessive heart attacks among Vioxx users on the front page as well as lots of lawyer ads on TV. I don’t see a lack of consumer-oriented headlines.
    Then I saw this paragraph from the source you linked to, written as if looking back at this from 2057:
    “Now, through our MRS (massive redistributive system), the top one percent controls one percent of national income. We all have jobs for life and our supreme leadership labor council decides what everybody gets paid. Perhaps we should thank our greedy forbearers.”
    Oh my, this ranks right up there with Left Behind as a fantasy.
    I’m a lifelong Democrat. I volunteer with the needy. I’m all for helping those who need help rather than helping those who don’t need help just to try to buy their votes, but if you’re not for something that people will go along with, what difference does it make what you’re against?

  • hapax

    Actually, I’ve found that the business section is the only part of our paper that does give unbiased political reportage, as well as science and tech news. Of course it’s all from the perspective of “here’s where those of you with money to spend might make / lose money”, but still, people tend to become remarkably reality-based when their bank accounts are on the line.
    Meanwhile, the news section continues to pretend that things are going swimmingly in Iraq, and that Dear Leader is universally beloved, that evolution and global warming are still “scientifically controversial;” the editorials pretend that anyone cares what Bill Clinton did or said ten years ago makes one bit of difference to the current world; the sports section pretends that the purpose of the university is to support the basketball and football teams; and the comics section still pretends that Charles Schultz and Johnny Hart are still alive and writing their own stuff, and that Garfield was EVER funny…

  • Eric the Read

    Even Circuit City’s so-called “best employees” didn’t give particularly good customer service. I would predict that firing them would encourage people to shop there, on the grounds that the new people couldn’t possibly be less interested in actually selling a product to a customer willing to pay money for it.

  • NonyNony

    Circuit City just needs to take a look over at CompUSA and their failed business model of paying their workers garbage wages and how well that has worked out for them – it hasn’t. Their workers are known as the worst-informed and worst paid of the big box computer sellers. And now CompUSA is closing a ton of stores – because people don’t want to shop there. They can go online if they want to help themselves, after all.
    I’d join in on a “boycott” of Circuit City over this, except that I haven’t shopped at a Circuit City in over a decade. Much like Wal*Mart, Circuit City’s service has never struck me as the model retailer that others should seek to emulate, if you know what I mean.

  • Rob H.

    “Even Circuit City’s so-called “best employees” didn’t give particularly good customer service.”
    They already fired their best workers back when CC went from commission to hourly wages. The store I worked at fired all those who made the most on commission, who not coincidentally knew the most about what they were selling. I found myself, the CD and video game guy, moved over into the A/V department many times, selling $2,000 TVs without much in the way of training due to us being so understaffed.
    The idea is that most customers are fairly well educated in what they want before they even walk in the store. Those that don’t are just looking for the cheapest item they can find. More and more stores are adopting this concept as they have to compete with the much lower prices of internet dealers.

  • Bugmaster

    The “you” of the second headline referred to a much smaller group, and carried a much less urgent message, but that’s (stupidly, indefensibly) how the Business section works.
    Well, yeah. The Business section is about business. That’s what it’s for. The “You Might Be in Danger of Heart Failure” article should’ve been in the Lifestyle section, or, preferably, on the front page. I don’t see anything wrong with keeping the Business section strictly about share prices, mergers and acquisitions, Chapter 11s, etc.

  • hapax

    Bugmaster: “The Business section is about business.” Mmm, no. Not in our paper at least; nothing about getting good jobs, the merits for employees of competing health care and pension plans, the success of microloan programs in Third World countries, the global imbalance between the rich nations and poor nations, pay inequality between racial, ethnic, or gender groups, balancing work and lifestyle commitments….
    The Business section has two, and only two, very narrow topics:
    1. Here is an opportunity for rich people to get richer
    2. Here is a potential danger that rich people could get poorer
    Ever single subject is analyzed from one or the other of those perspectives.
    If your paper covers more than that in its “Business” section, it would definitely be different from any that I’ve received.

  • hapax

    Sort of like the weekly “Religion” section, which has exactly two topics:
    1. Here’s what the Baptists are doing this week.
    2. Here are some weird people who aren’t Baptists. What should Baptists think about them?

  • Bugmaster

    1. Here is an opportunity for rich people to get richer
    2. Here is a potential danger that rich people could get poorer Well, yeah, I always thought this is what the Business section was for: to alert the shareholders (both big fish, and small fish, but definitely shareholders) to any new developments. I never expected it to be about anything else. *shrug*
    To be fair, though, while the global imbalance between rich and poor nations definitely affects business, in an indirect way, it sounds more like the material for the World section. I’ve always understood Business as basically investment advice, not a place where humanitarians can discuss how to make the world a better place.

  • Ryan Ferneau

    Garfield has always been funny. But its humor is often too deep for most people to understand. Here is a website that might help: http://permanent-monday.blogspot.com/ (Sorry it stopped updating)

  • mcc

    Some might, but as can be seen from the success of Wal*Mart, not enough to make a significant difference. American consumers will seemingly put up with shoddy goods sold by incompentent staff in order to save a few pennies.
    No, but see, that’s the thing. This strategy works for Wal-Mart, but it can’t work for Circuit City– because anyone who Circuit City might hope to reach by this strategy is just going to shop at Wal-Mart instead, since at least as far as my experience goes Wal-Mart even before this move already offered better prices, better access to employees and on some kinds of items even better inventory than Circuit City.
    The least common denominator strategy works, but only if you are in fact the least common denominator.

  • the opoponax

    Well, yeah, I always thought this is what the Business section was for: to alert the shareholders (both big fish, and small fish, but definitely shareholders) to any new developments. I never expected it to be about anything else. *shrug*
    yes. those of us who are unsatisfied with this aren’t unsatisfied because we’re opening the paper every morning, not finding a wider range of articles, and saying, “ummm, wait, what happened to all the coverage of microloans and different employers’ benefit packages?” we are unsatisfied because we want to see more than just investment advice, we seek change.

  • Raka

    …it can’t work for Circuit City– because anyone who Circuit City might hope to reach by this strategy is just going to shop at Wal-Mart instead…
    I see frequently see this sort of logic on the internet. And it is good logic. However, either people aren’t as logical as the internet gives them credit for being, and/or there are more variables involved than the internet logicmongers acknowledge.
    Some people will continue to shop at CC because it’s next door, or because they have a pattern of shopping there, or because they hate Wal*Mart, or because they don’t want to rub shoulders with trailer-trash, or because they see a CC ad and don’t bother researching prices elsewhere, or because they have a perception that they’ll get better/more expert service at CC and that perception will persist despite all but the most powerful evidence to the contrary…
    For the most part, humans don’t make decisions based on some easily and objectively quantifiable mental spreadsheet. Even when we do, there tend to be a bunch of columns that are hidden from ourselves and survey-takers alike.

  • the opoponax

    not to mention that the Wal-mart business model won’t work for Circuit City in the areas where their inventory doesn’t overlap with Wal-mart’s. i’m sure it’s fine for the CD and video game departments — i go in looking for Highway 61 Revisited, i go the the “Rock” section of the CD department, look under “D” for Dylan, and either they have it or they don’t. there are no options or specs to consider. i grab the CD, take it to the cash register, pay, and leave. the only possible questions for employees would be the proper genre for Dylan (maybe i thought it could be in “Folk”), the location of the “Rock” section, and the like.
    but customers who are coming in to buy the kind of equipment that Circuit City carries and Wal-mart doesn’t often need more help than that. there may be competing brands, or competing products within a brand, that have similar features and price points. there may be different options to choose from — do i want to buy the warranty? do i want the 28 inch or the 36 inch? are there any accessories i’ll need — the proper cables, a carrying case, a lens? and this is an area where a Wal-mart style employee just won’t be able to help. thus people who can just go to Wal-mart for their cheaper prices will do that, and those who need better customer service before they’re willing to fork over $$$$ for highly specialized equipment (which often is not a big screen TV, but a professional investment) will go to store where sure, they might pay a little more, but they’ll also know that they’re getting what they need.

  • Laertes

    “Well, yeah, I always thought this is what the Business section was for: to alert the shareholders (both big fish, and small fish, but definitely shareholders)…”
    Why the shareholders? Of all the people involved in business–owners, management, labor, consumers, why is the business section written to serve the shareholder? Is it because there are more shareholders than workers in their reader base?
    As our host points out, this point of view neccesarily slants the news. Circuit City fires a few thousand workers and perhaps their share price rises. Is this presented as good news or bad? A locked-out union capitulates, agreeing to a humiliating contract including wage and benefit cuts. Will the resulting stories focus more on the benefits to the shareholders or the costs to workers? When the parties were in negotiations, were the articles about “labor problems” or “management problems”?

  • bellatrys

    Bugmaster, you have a very narrow and limiting view of what “business” is – it’s *everything*, and if you think you can “succeed” without taking into account the wider world, you’re a fool. (Yes, there are lots of fools out there, and some of them are very rich, but that doesn’t make them the less foolish. There’s a parable out that, or three.)
    Compare/contrast the stunningly-informative show “Marketplace” on NPR, which constantly weaves the human/political/historical/social issues into the bigger pictures of narrow business news. As a result of listening to it for gee, about 10 years now, I know more about the world, AND “Big business”, and economics as a whole, than I ever learned from school or from any Business pages, or anything before the blogosphere and folks like Jerome a Paris came along to help sort things out for ordinary, non-richy-rich folks muddling along in the world. It’s one reason I don’t get surprised by a lot of things that take my stocks-following, Business-Authority trusting relatives and acquaintances by surprise.
    Divorcing the two, as if “Business™” were something that existed apart from “The World,” is not just bad philosophy, it’s why (among other things ) successful businesses get blindsided by revolutions not infrequently…both the kind with guns and the other kinds. Whence Ford, Chrysler, Dodge lately, eh?

  • cjmr

    Johnny Hart are still alive and writing their own stuff,
    Don’t know if Mr. Hart was still writing his own stuff (although if he wasn’t I think it would have been less ‘preachy’ than it was) but he only died Saturday.

  • bellatrys

    …in fact, the Cali. grocery stores are still hurting from customer boycotts, *years* after the strikes, to the point where they have had to spend some of their profits to put out “begging” ads saying “We’re not the bad guys, honest! We’re not exploitative assholes! We CARE!” and people I know personally who tend to be socially unaware and oblivious or just preoccupied with their own lives were/are aware and participating and on the side of labour in it all. Walmart is spending big bucks to run similar ads on TV, doing the same thing. So, yet another example of how ignoring *people* as if they^h^h^h^h WE were irrelevant to “Business™” is *bad* business — I don’t imagine that pet food companies’ shareholders are any too happy with the consequences of unthinking Invisible Hand Worship right now, either.

  • hapax

    Well, pretty off-topic, but fwiw:
    “Richard Newcombe, founder and president of Creators Syndicate said “B.C.” and “Wizard of Id” would continue. Family members have been helping produce the strips for years, and they have an extensive computer archive of Hart’s drawings to work with, he said.”
    For those of us obsessive about the comics biz “helping produce the strips” is a pretty transparent euphemism, equivalent to resigning “in order to spend more time with my family.”
    Not that Hart, and BC, wasn’t brilliant and original in its heyday. But the ossification of the comics page, and the institutionalized resistance to new artists and ideas is a whole nother rant, that has done been done better by other folks than me.

  • Steve

    Forgive me if I’ve told this story here before, but I think an interesting way to understand your community is to do a poll in the paper of people’s favorite comic strips, with comments.
    Back in the late 80′s, the newspaper from the area I lived in at the time did this. One of the favorites was Family Circle, with many comments like “because it’s cute”. One of the least favorites was “The Far Side” because “I don’t get it.” This was a very apt cross section view of my home area at the time.

  • Steve

    Oh, and I bought my last computer at Circuit City…not a pretty experience. It really is “let the buyer beware” anymore, but we’re partly at fault for wanting it so cheap. I’m sure I could find a local shop and get a expert advice on putting one together for my tastes and needs. But I’d pay more. Which I should be willing to do, I guess. But then again, as a somewhat-techie-type, I pretty much know what I want.
    I ordered mine over the phone, and the guy who could barely speak english screwed up my order…but after it arrived, I went into the store and they straightened it out for me.

  • cjmr

    Way back in the dark ages (12 years ago) when we were putting together a sound system, the guy at Circuit City actually worked with us for close to an hour, letting us listen to this amp with that CD-player on those speakers, and then changing the set-up so we could listen to other speakers with the same components, then to a different amp with the first speakers, etc. However much comission he made off the sale, he certainly deserved.
    Last time I went in a Circuit City, I couldn’t find a single person to help me after 15-20 minutes of looking for one–and I was one of only two customers in the store, so it’s not like they were busy helping other people. Ugh. I had gone there on purpose because the employees there had previously been more helpful than the Best Buy ones.
    You get the quality of employees you’re willing to pay for.

  • Bugmaster

    Bugmaster, you have a very narrow and limiting view of what “business” is – it’s *everything*, and if you think you can “succeed” without taking into account the wider world, you’re a fool.
    Well, and I think that only a fool would rely on a single resource for all his business information needs; and only a doubly-foolish fool would pick a regular newspaper as this resource.
    Why the shareholders? … Is it because there are more shareholders than workers in their reader base?Probably. People usually work at all kinds of different corporations, depending on where they live, but anyone can invest in anything (and the stock price of major corporations can affect the entire market). Thus, it’s reasonable to assume that major newspaper switch to investment advice to cater to a wider audience. That’s just a guess, though.
    Circuit City fires a few thousand workers and perhaps their share price rises. Is this presented as good news or bad? A locked-out union capitulates, agreeing to a humiliating contract including wage and benefit cuts. Will the resulting stories focus more on the benefits to the shareholders or the costs to workers?This is the same as asking, “The US invades Iraq, what will the World page say ?”. Or, “A joint EU/NASA probe crashes into Mars, what will the Science section say ?”. If the newspaper is any good (which it most likely isn’t, not everyone has a Fred on their team), then it will report objectively on the issue. If the newspaper is really good, it might present op-eds on both sides of the story, as well (for example, one op-ed could point out that destroying your employee base is harmful to the stock price in the long run). This applies to World, US, Lifestyle, Business, and any other section.

  • Jason

    What’s amazing here … is that the firm though it was a good idea to advertise this practice.
    This kind of misses the point. I’m not schooled chapter and verse in the regulations, but the SEC requires public companies (like CC) to disclose major events. So it’s unlikely that CC just thought it was a good idea to announce this — they were obligated to do so. (See the fine print at the end of the release.)
    (Not that I have any love for Circus Shitty — I haven’t shopped there since the DIVX debacle.

  • cjmr

    I can see the SEC requiring this sentence of the press release:
    The company has completed a wage management initiative that will result in the separation of approximately 3,400 store Associates.
    But wouldn’t this section normally be reserved for the annual report sent to shareholders, not released to the news media?
    The separations…focused on Associates who were paid well above the market-based salary range for their role. New Associates will be hired for these positions and compensated at the current market range for the job.

  • the opoponax

    “People usually work at all kinds of different corporations, depending on where they live, but anyone can invest in anything… Thus, it’s reasonable to assume that major newspaper switch to investment advice to cater to a wider audience.”
    but any large publicly traded multinational corporation is going to have far more workers than it does shareholders. tens of thousands of people (maybe even hundreds of thousands of people) work for Citibank, or Ford, Gap, etc. but how many shareholders can they possibly have?
    especially the important shareholders, the ones they really want to curry favor with. Ford doesn’t care about some Joe Schmoe who’s owned 5 shares for the last 20 years. If Joe sells his 5 shares next week and buys 5 shares of Merck, not only will Ford not give two craps, but Merck won’t, either. business pages are not written for the 100,000 people who each own a few shares of your company’s stock.
    not to mention, if you look at things holistically, the total number of workers in the US is exponentially more than the total number of people who play the stock market, let alone the shareholders of any one company.

  • Jason

    But wouldn’t this section normally be reserved for the annual report sent to shareholders, not released to the news media?
    The target audience for a press release are analysts, money managers, institutional investors, etc. That press releases like this get picked up by the news media is a bonus (or in some cases like this, maybe not). Actually, “press release” is kind of misleading these days, as they’re not so much released to the “press,” as just uploaded to a service like PRNewswire.com so that people who are looking for those kinds of things can find them.

  • Mnemosyne

    …in fact, the Cali. grocery stores are still hurting from customer boycotts, *years* after the strikes, to the point where they have had to spend some of their profits to put out “begging” ads saying “We’re not the bad guys, honest! We’re not exploitative assholes! We CARE!” and people I know personally who tend to be socially unaware and oblivious or just preoccupied with their own lives were/are aware and participating and on the side of labour in it all.
    I still refuse to set foot in Vons/Pavilions or Albertson’s. I’m forced to shop at Ralph’s, because Trader Joe’s doesn’t have everything and Gelson’s is 15 miles away.
    So, yes, by choosing their stockholders over their employees, Safeway et al managed to create some lasting bad feelings in their customers. And yet they’re getting ready to play the whole game all over again.

  • hapax

    I think it’s the difference between a “news paper”, which is a device (traditionally smushed dead trees, but now all sorts of media up to and including smushed dancing electrons) intended to convey information to the users, and what we call in our house the “new spaper”, which is a device (of various media, blah blah blah) intended to convey eyeballs to advertisers. (Hence the neologism “spaping”, which means to insert all sorts of tasty gimmicks into a sales pitch)

  • dave

    The Circuit City store near my workplace has had a young kid working the music section for the last couple of years with whom I could actually carry on a half-decent conversation about music. I didn’t see him when I went in last Tuesday to pick up the new Fountains of Wayne (which they didn’t have anyway), so I fear he may have been one of the victims.


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