Circuit City, having foreseen the drop in consumer dropping had already announced a shutdown of 155 stores and layoffs of about 17 percent in the workforce. An additional amount of 1300 workers were laid off during this period of financial slump.
Not only is the consumer spending caused this, but the even the suppliers’ have tightened their credit lines causing the situation to worsen by a great deal. Despite, the company’s above attempts to improve the scenario, the suppliers confidence has remained low. In addition to the low levels of consumer spending , the credit crunch created by the suppliers has worsened the economic crisis. Circuit City was amongst many of the retailing organizations to have suffered serious setbacks.
The supplier’s main concern was the non-payment of and this concern in the case of Circuit City can be said to be viable as the financial statement showed Circuit City’s liabilities were overwhelming its assets by a great margin.