Thursday, March 5, 2009
bankruptcy and the consumer
Over the past year the economy has been declining and digging itself deeper and deeper into a recession. That includes a lot of stores going bankrupt. Circut City announced bankruptcey on November 10, 2008. It was the number two electronics seller after best buy. However fast forward to the beginning of 2008 when stores were just beginning to announce that they were shutting down stores throughout the country. An article from CNN money stated "Consumers will be skeptical about buying a $1,000 or $2,000 flatscreen TV with a warranty at Circuit City," said Craig Johnson, retail analyst and president of Customer Growth Partners. "In their mind, there's no guarantee that the company will still be around in the future." Personally I think this is the main problem. When stores begin to announce that they are shutting down stores, consumers get scared and don't want to shop there anymore. I remember when my mom told me that Circut City was closing stores and told me to use my remaining gift cards for there because it will probably go bankrupt. Another souce cnet news also stated the same thing, that consumers get scared to make large commitments and decide not to shop at that store anymore. In my opinion I don't think there is anything Circut City or any other retailer that is about to go bankrupt can do because it was fully the consumers decision to stay away from the stores. The only thing they could have done differently would be to have a lot of promotions and be more finacially responsible.