Circuit City Stores Inc. was thinking about making dramatic changes to its operations this year -- selling appliances and paying commissions to its store salespeople.
Doing so would have reversed decisions the chain made in 2000 and 2003 -- and would have been the first step toward admitting it made a mistake.
Selling appliances and paying commissions were part of Circuit City's planned turnaround efforts for 2009 under James A. Marcum, the retailer's vice chairman and acting president and CEO.
"We were investigating changes to the business model, and those were two we were actively pursuing," spokesman Bill Cimino said. "We were not ready to make any announcements quite yet and we had not finalized anything, but we were in the advance planning stages."
The retailer looked at changing its pay structure to have a form of commission sales staff or some broader base of incentives, he said.
Circuit City stopped paying commissions in early 2003 and laid off the equivalent of 1,800 salespeople then.
In early 2007, the company fired 3,400 store workers, half of them among its highest-paid sales associates, who had been averaging $25 per hour before the company stopped paying commissions. The other half were back-office staff, including people who managed inventory and prevented theft.
Circuit City also looked into carrying appliances but wanted to find ways to lower overhead costs.
It was considering, for instance, having a partnership with appliance makers -- Circuit City would sell the products but not carry the inventory in its stores or warehouses. The manufacturer would ship the goods once the sale was completed.
"We were looking at different scenarios," Cimino said.
Stopping the sale of appliances and paying commissions were two of several missteps the Henrico County-based retailer made, retail experts and former executives and board members have said.
For instance, the chain used the former appliance department space for new product categories, including DVD movies, video games and digital cameras. But Circuit City never replaced the revenue it lost from selling those big-ticket items.
Contact Gregory J. Gilligan at (804) 649-6379 or ggilligan@timesdispatch.com.
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