Circuit City Applies for Bankruptcy

Retailers which are struggling to make sales in this faltering economy have a lot to be concerned about. Consumers have cut back on buying due to too much debt, job instability, losing money in the stock market, and uncertainty about what state their finances will be in. The result is that some retailers are having difficulty staying in business.

Circuit City, the nation’s second-largest electronics chain, has filed for Chapter 11 bankruptcy protection. However, they have obtained enough credit to continue to operate through the Christmas season. With credit, they can purchase enough products to sell through the busiest buying season of the year, in hopes that they can get their business back on its feet. Chapter 11 bankruptcy allows a business to hold off on paying its creditors as it reorganizes and forms a plan to pay them.

Perhaps falling gas prices will encourage shoppers to get out and spend some money at Circuit City and other businesses. A good holiday shopping season would do a lot to spur on the economy!

Retailers which want to attract customers may have to offer incentives to beat out the competition. Incentives can be sale prices, discounts for credit card holders, or special gifts, such as free gas certificates. Competition for consumer dollars is fierce, so businesses like Circuit City will have to go the extra mile to make sales. Hopefully Circuit City and other struggling retailers will pull through and will be able to stay in business!