Circuit City & Best Buy: Adaptation in Consumer Electronics Retail

Circuit City & Best Buy: Adaptation in Consumer Electronics Retail In 1987, Richard Schulze saw a packed Sam's Club on a Tuesday evening and asked himself one question: what are customers actually saying? His answer — we want to be in control — led to the decision to abolish commissions, build 54,000-square-foot warehouse showrooms, and stock every category regardless of margin. Meanwhile Circuit City was opening 47 stores a year in a 34,000-square-foot premium format with a commissioned salesforce and a CEO who avoided video games and CDs because their margins were too low. This case compares two companies facing the same shifting customer and market, and examines why one adapted repeatedly while the other clung to its margin structure until the customer left.

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