Circuit City to call it quits. e-Lesson: Take the offer when you can

Big box electronics retailer Circuit City is seeking Bankruptcy Court approval to start liquidating its assets after failing to reach an agreement with its creditors.  The rub is that Blockbuster had tried to acquire Circuit City last year but the overtures were rejected. Although Circuit City eventually warmed to a deal the talks between the two went nowhere.

The lesson here is that 30,000 employess will soon lose their jobs because Circuit City failed to address a critical erosion in their core business model.  Blockbuster was  a logical suitor because of its broad retail store base and complementary products (videos to be viewed on popular, high-end electronic devices).  Blockbuster was facing similar erosion due to on-demand movie and television e-tailing from cable companies and would likely have struck a favorable deal.   But (as George Bush might say) Circuit City “miss-underestimated” the growing dominance of online and offline retailers such as Best Buy, Walmart, and Amazon. 

Jedwar’s advice: “When in doubt, branch out.”  When faced with similar conditions (merge or fail), consider carefully your options.  Many times 2 birds in the hand are worth far more than one in the bush.