Circuit City Depletes Brain Trust By Mark Fleischmann April 4, 2007 — Circuit City announced last week that it would fire 8.5 percent of its retail-floor staff and hire replacements at lower pay. Savor the insane panache of the press release: "The company has completed a wage management initiative that will result in the separation of approximately 3,400 store Associates. 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." Said CEO Philip J. Schoonover: "We are taking a number of aggressive actions to improve our cost and expense structure, which will better position us for improved and sustainable returns in today's marketplace."

This begs questions. Will firing knowledgable workers and replacing them with less knowledgable ones really position Circuit City for "improved and sustainable returns"? Or will it drive away customers frustrated by lack of expertise on the sales floor? The move comes as other chains attempt to lure consumers with the promise of savvy sales staff. Most notable example is none other than Circuit's arch-rival Best Buy, which has been pushing its Magnolia stores-within-stores in a splashy national TV ad campaign in which budding home theater buffs practically fall into the loving arms of wise and helpful BB staffers.

The biggest beneficiaries may be (eternal optimist that I am) a/v specialty retailers who employ genuinely knowledgable and passionate help to sell the kind of product you won't find in a big chain store. Oh, almost forgot. Circuit says the fired workers can re-apply for their old jobs at reduced pay within a few weeks.