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03/29/2007

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People can and will pay more for products if you give them a valid reason. Radio Shack dominated its competition for years, even though they charged significantly higher prices for brands that weren't available anywhere else. They went in the toilet when they stopped selling exclusive brands and tried to be just like everyone else.

Crutchfield does the same thing, selling over-priced consumer electronics, but giving consumers enough of a reason to want to pay more than they would at the box store down the street.

Wal-mart proves the exact opposite is true. People will shop at the inexpensive store to save a dollar, even if it means losing the local flavor of the mom and pop stores.

Personally, I believe in a free market society where businesses can make decisions such as the one that Circuit City has chosen. I also believe that, as a consumer in a free market society, I am free to tell them that they can go fuck themselves and I'll be shopping elsewhere from now on.

And if there isn't another store that will fill that gap, someone will open one, hire all the ex Circuit City employees, and make a fortune.

God bless capitalism.

All this back-and-forth on whether the new hiring is good business for the company is interesting, but really, that's gravitating away from the real issue. The question is whether Circuit City's firing of its employees is immoral, not whether it's effective.

And I'm with Conrad in failing to see why Circuit City should be condemned for this.

Here's what happened: One group of people (the directors and shareholders of Circuit City) and another group of people (the employees) made a deal to exchange money for services. Both groups of people made the deal because they wanted to make as much wealth as possible. Neither group was in it for humanitarian reasons. The employees would not have worked for CC if they already had the money, and CC would not have paid the employees if it could have sold the electronics itself. If the employees could find work elsewhere for more pay (No "Fuck you, Heartless Former Employees of Circuit City! The chances of me helping you earn your commission at Best Buy are zero!" there if that happened, I'll bet...), they'd have taken it. As it stands, the employers found the better deal first.

And that's all that happened. And since here in the United States of America we feel people should have control of their own lives, I'm not particularly outraged that one party of money-makers chose to exercise that right by ceasing to deal with another group of money-makers, all of whom, by the way, undoubtedly have children who need braces, etc., too.

Which brings us back to a good question Conrad asked: Why is it a moral imperative that Group A should give the jobs it created to Group B instead of C?

And let me add one of my own: Even if Group B all had families to support and Group C didn't, wasn't it the decision of each of Group B's members to get married/screw/have kids/buy that house etc.? What do the needs of people have to do with the value of a certain service? Why should I pay more to have something done for me because the guy doing it decided to load himself with financial burden?

All y'all are confusing margin with profit. Margin is a nice, hypothetical number that you would like to achieve on the markup of your goods. Profit is what you take to the bank after you have SOLD an item and paid the expense (including wages) of offering it for sale. What Conrad assumes is that sales will remain constant with an new and presumably less knowledgable staff. What Tom assumes and seems unable to articulate is that sales will drop for at least 2 reasons: less knowledgable salespeople and bad PR. No sales- no profits. No matter how high your margin. My approach to all this is to buy from local retailers only. I pay a bit more, but they have computers too and know an item's current market price. I get satisfaction from knowing the money is going to someone I know, who uses my services as well. If the item is great and lasts 10 years, who cares about an extra $50. If it stinks and breaks 2 days after warranty I don't have to talk to a pimply 20 year old in a blue vest 3 sizes too big about how pissed off I am. I go to my local merchant and he does what he can to make it right. Also my demands on him are more realistic; because he is not a BIGBOX I don't expect him to replace something I've used for a year. It usually works out pretty good. You should try it. It's called living responsibly and sustainably in the place you call your community.

Wow gnome! Unable to rebut my statement that a reduction in wages will not ipso facto lead to a reduction in margins, you assert that I am confused and really meant a reduction in profits. Then you assume various consequences of a wage reduction -- which may or may not occur -- that would reduce profits and declare that you have proven me wrong.

If you say the sky is blue, and I rebut you by declaring that, when you said "sky" you actually meant your aunt Minnie's cat, which everyone can see is black, I am fooling myself if I think I got the better of the exchange.

And one more thing, Gnome: your assertion that the return / exchange practices of local retailers are more generous than those of so-called big-box stores is conclusively rebutted by a University of Chicago study which I am too lazy to try to track down on-line.

On the other hand, perhaps when you said "replace" you actually meant "look at blankly and shrug shoulders", in which case I have no doubt you are correct.

I know that technical reading is a fading skill but please take the time for comprhension before you loose your ever-ready barbs. I actually said that my expectations for a complete refund are lower with my local guy because I know he has to make a living, too.
Your original claim that lowering wages would increase margin is only germaine if sales remain constant, go up, or do not decrease past a point where the higher margin offsets the decrease in sales. Tom is maintaining that new, inexperinced sales personell plus bad PR will take sales below that point.
I rebutted or supported neither, just pointed out that margins are meaningless except as a guideline when you are budgeting. Profits are the actual measure of a business' financial health.

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