Circuit City — The “Good to Great” Darling That Fired Its Own Moat

Circuit City was the second-largest consumer-electronics retailer in the United States, and on January 16, 2009 a bankruptcy judge approved its plan to close every last store. Founded in Richmond, Virginia in 1949 as the Wards Company — a single television store opened on the hunch that the South’s first commercial TV station was about to go on the air — it grew over six decades into a chain of roughly 700 big-box superstores, renamed Circuit City in 1984 and listed on the New York Stock Exchange the same year. For a generation it was where Americans bought the television, the camcorder, the first home computer, walked out past a wall of car stereos, and were talked through the choice by a commissioned salesman who actually knew the difference between the models. By the end, the 567 stores still standing were liquidated in going-out-of-business sales, and more than 34,000 people lost their jobs.

The detail that turned the collapse into a business-school parable is that Circuit City was, for a while, the model. In 2001 Jim Collins anointed it one of eleven exemplars in Good to Great, citing stock returns from 1982 to 1999 that beat the market roughly twenty-two-fold. It was supposed to be one of the companies that had cracked the code of durable greatness. Seven years after the book reached the bestseller list, the company that proved its thesis was filing for bankruptcy, and the case is now taught as a caution about reading a tailwind as a virtue.

What killed Circuit City was the ordinary squeeze of its industry — Best Buy beat it on stores and experience, Walmart beat it on price, and Amazon was quietly making the showroom itself obsolete — compounded by a recession that arrived at the worst possible moment, in late 2008, when electronics are exactly the kind of thing households stop buying. But the chain did not merely lose to those forces. It handed them the win. In a series of cost cuts culminating in March 2007, it fired thousands of its most experienced, highest-paid salespeople specifically because they were experienced and highly paid, and replaced them with cheaper hires — gutting the knowledgeable-service advantage that was the one thing keeping a higher-cost store relevant against a discounter and a website.

So the verdict is unusually clean. Circuit City was killed by the broad disruption that flattened a generation of electronics retailers, and also by a self-inflicted wound that the company chose, calculated to the dollar, and booked as savings. The brand survives today only as a licensed website, sold off in the wreckage to Systemax for $14 million — a label, not a chain, the most literal kind of afterlife a dead retailer gets.

RadioShack — The Parts Store That Sold You a Phone Instead, and Died

RadioShack was the place a generation of Americans went for the thing no one else stocked — a resistor, a 9-volt battery, a fuse, a length of speaker wire, a CB radio — and on March 8, 2017 it filed for bankruptcy for the second time in two years, after which all but a few dozen company stores went dark and the name slid into the half-life of a licensed website. Founded in Boston in 1921 by brothers Theodore and Milton Deutschmann as a mail-order supplier to ship radio officers and amateur “ham” operators, it was bought out of near-insolvency in 1962 by the Tandy Corporation, a Fort Worth leather-goods company, for about $300,000, and remade into a national chain of small, dense, knowledgeable stores. At its 1999 peak it ran roughly 8,000 outlets across the United States, Mexico, and Canada, and for decades it was, in the most literal sense, the corner electronics store of the country.

The detail that turned the collapse into a parable is that RadioShack spent the last decade of its life trying to be a phone store, and was good at neither phones nor the parts business it abandoned. The hobbyist who once wandered in for a soldering iron found an aisle of cellular plans and a clerk asking for a name and address; the phone buyer found a smaller, dingier version of what the carrier’s own store and Best Buy did better. The chain that had genuinely been the maker’s pantry — the place that sold its own TRS-80 personal computer in 1977, years ahead of the field — could not work out what it was for once the components went to the internet and the gadgets went to the smartphone.

What killed RadioShack was a failure to adapt, compounded by a doomed bet on mobile. The components-and-batteries business was structurally tiny — a high-margin trickle that paid the rent on thousands of small leases but could not grow — and the small-store format was perfect for parts and hopeless for the big-ticket electronics that migrated online. When management leaned the whole chain into selling smartphones, it tethered its fate to carrier commissions and to a partner, Sprint, whose interests diverged from its own. A first Chapter 11 in February 2015 carved the company up; a second in March 2017 finished it.

The afterlife is the licensed-label kind. The brand and customer data were sold for $26.2 million in 2015; the trademarks have since passed through Retail Ecommerce Ventures and, from 2023, the El Salvador-based Unicomer Group, surviving as a website, a dealer network, and a logo on imported batteries — a name that outlived its stores by changing what the name was attached to.