McCollough, W. Alan 1950–

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W. Alan McCollough
1950–

Chairman, president, and chief executive officer, Circuit City Stores

Nationality: American.

Born: 1950.

Education: Missouri Valley College, BS, 1971; Southern Illinois University, MBA, 1974.

Career: U.S. Navy, minesweeper operations officer; Milliken and Company, cost accountant, director of quality, manufacturing plant manager, director of marketing; Circuit City Stores, 1987–1989, general manager of corporate operations; 1989–1991, assistant vice president; 1991–1994, president of central operating division and corporate vice president; 1994–1997, senior vice president of merchandising; 1997–2000, president and COO; 2000–2002, president and CEO; 2002–, chairman, president, and CEO.

Address: Circuit City Stores, 9950 Mayland Drive, Richmond, Virginia 23233; http://www.circuitcity.com.

■ The electronics retail executive W. Alan McCollough was chairman, president, and chief executive officer of the national technology-services and retail company Circuit City Stores, headquartered in Richmond, Virginia, as of 2004. McCollough took over the leadership of the company in June 2000—succeeding Richard L. Sharp, who remained chairman of the company—after 13 years of extensive experience in merchandising and store management, two of the retailer's primary operating areas.

SECOND-LEADING U.S. ELECTRONICS RETAILER

The primary business unit of Circuit City Stores was the Circuit City Group, which was the second-largest U.S. electronics retailer as of 2004 (behind Best Buy Company, which had fewer stores in fewer markets but higher sales). Circuit City owned stores in over six hundred U.S. locations, with most designated as superstores—that is, as very large stores

with broad selection and competitive prices selling a wide variety of products, including consumer electronics (such as audio and video equipment), personal computers, movies, music, games, and entertainment software. The Circuit City Web site provided shoppers with extensive product information, direct shipment of purchases, real-time inventory status of products in stores, and Express Pick-up, enabling customers to order goods online and obtain them at specified stores.

The company previously ran over 30 shopping-mall-based Circuit City Express outlets. The company also established the used-car seller CarMax in 2002. At the time of McCollough's ascendancy to the helm of Circuit City, CarMax was the nation's leading specialty retailer of used cars and a rapidly growing new-car retailer. By 2004 there were 40 CarMax locations across the United States.

CIRCUIT OF LEADERSHIP

McCollough began his professional career with the textile manufacturer Milliken and Company. Over his 12 years at Milliken, McCollough held various positions, including cost accountant, director of quality, manufacturing plant manager, and director of marketing. McCollough joined Circuit City in 1987 as general manager of corporate operations. Within two years he was named assistant vice president, directing the development of a large number of store operating procedures designed to promote quality and uniform service across the company's large and rapidly expanding store base. Along with these responsibilities McCollough led the implementation of the company's distributed point-of-sales system, which was used throughout the organization.

From 1991 to 1994 McCollough was vice president of Circuit City and president of the company's central operating division, which comprised more than one-third of the company's stores. In 1994 he became senior vice president in charge of merchandising, a post that involved responsibilities for all merchandise selection, purchasing, and inventory management. During the next three years McCollough developed sturdy working relationships with the vendor community that extended over the entertainment-software, consumer-electronics, major-appliance, and personal-computer industries. McCollough became president and chief operating officer in 1997, which made him responsible for activities involving human relations and resources, management information systems, merchandising, store operations, and planning.

McCollough became chief executive officer of Circuit City in June 2000. A few months before this time, the outgoing CEO Sharp said of McCollough, "Alan's extensive experience in the critical areas of our business, his commitment to our high-quality consumer offers, and his outstanding leadership talents make him the ideal person to guide our company into the next decade" (January 3, 2000). As CEO, McCollough directed the continuing growth and development of both the Circuit City and CarMax automobile superstore businesses. In June 2002 McCollough was elected chairman of the board of directors.

LAGGING BEHIND BEST BUY IN 2000

Upon becoming Circuit City's chief executive officer, McCollough found the company lagging behind Best Buy in such financial data as sales, sales per square foot, and return on investment. Although both stores saw slower sales in the first half of 2000, Best Buy doubled its stock value in the same period that Circuit City saw its value remain flat.

McCollough began implementing a detailed plan involving a new store format, tests of a stand-alone appliance-only concept (in which a small store would sell only appliances), the rolling out of new merchandising displays, and continuation of the expanding digital-product cycle in consumer electronics. Circuit City would stock more products on store shelves and place registers near entrances, allowing consumers to more easily help themselves to products and to navigate the store in a more efficient manner—what McCollough called a "grab-andgo" climate. A combination of commissioned sales counselors and hourly employees were put in rotation at each store. This new employment policy contrasted the historically exclusive use of commissioned personnel; the switch helped reduce operating expenses.

McCollough also expanded the number of high-technology products offered by Circuit City outlets, including digital cameras, 35-millimeter cameras, software titles, and video games. New merchandising displays were created in order to better highlight the products and services available through the various alliances the company maintained with companies such as AOL and Sony. By shifting Circuit City's product lines and introducing higher-margin, new-technology products, Mc-Collough hoped to rely less on sales from computers and other home-office products, whose profit margins continued to erode.

ELIMINATING APPLIANCES

McCollough initiated a plan to eliminate major appliances from the main Circuit City locations in order to provide more space on the selling floor and in the warehouse for the expanded product categories. While the company's gross margins for appliances were in line with other products, the storage and delivery costs of the oversized items were much greater than for smaller products. McCollough also added that the appliance category did not have the same growth potential as consumer electronics, as the selling of appliances was a cyclical business tied to housing starts and other economic factors. McCollough remarked that 70 percent of customers bought appliances as replacements for older models.

In the end McCollough found that the company needed an extra 20,000 square feet of additional floor space per store in order to accommodate all of the high-growth products it wanted to sell. With Lowe's, Home Depot, Sears, and other companies all involved in the appliance market, McCollough decided it would not be in the company's best interest to pursue further appliance sales.

In 2000 McCollough opened 25 new stores and remodeled 30 to 35 existing stores, each with a new open, warehouse-style format—hardwood floors and bright signs replaced the former red, black, and chrome design scheme, and wider aisles, higher ceilings, and "great sight lines" were introduced. McCollough wanted the bold new atmosphere of Circuit City to impress customers from the moment they walked into stores. Test markets for the consumer electronic-only format included Richmond, Virginia, and Miami, West Palm Beach, Tampa, Fort Meyers, and Orlando, Florida. Along with these actions, McCollough tested an appliance-only format in six standalone locations in Florida. McCollough also led Circuit City to implement an Internet-based training program for store-level associates.

YEAR-END RESULTS

By the beginning of the last quarter of 2000 Circuit City continued to lag behind Best Buy despite McCollough's initiatives. However, McCollough continued to believe that the new product cycle, format changes, and merchandising improvements would help Circuit City better compete with Best Buy. By the end of 2000 McCollough saw improvement in sales at existing stores that had undergone remodeling to replace the defunct appliance business. McCollough slowed the pace of total-store overhauls, hoping to strengthen the company's brand identity and returns on investment with a less expensive future remodel (that of $1.5 million per store rather than $2.5 million).

SEEING IMPROVEMENT

In 2001 McCollough began a new marketing program designed to better communicate Circuit City's new look and product offerings to consumers. He hired Fiona Dias as senior vice president of marketing in order to run marketing as a separate division rather than as part of another division as had been done in the past. In the first part of 2001 sales lost through the removal of appliances were balanced by overall sales increases resulting from overhauled store layouts and operations. Later in the year McCollough announced the company's new advertising slogan: "Circuit City—We're With You." McCollough sought to improve customer service through an overhaul of internal operations—using Six Sigma, an accepted business philosophy fostering customer satisfaction, as its guideline.

STILL UNDECIDED WITH STORE FORMATS IN 2002

McCollough spun off CarMax in the first quarter of 2002, after CarMax's business matured as customers bought used cars rather than new ones during the economic downturn of the early 2000s. McCollough hoped that separating the two businesses (Circuit City and CarMax) would permit the management of each to better focus on financial and operational objectives. With respect to Circuit City, after a year and a half of testing several formats and programs, the company had yet to determine a clear-cut remodeling plan for its aging store base.

McCollough announced that Circuit City would redesign three hundred of its stores to house new video departments, complete with seating areas for the full home-theater experience, to better merchandise the high-growth television category; the company had already been doing this in all newly built stores. McCollough later announced that two other formats would also be tested, one in Chicago, Illinois, and another in the Baltimore–Washington, D.C., area. This announcement caused some disruption on Wall Street, as Circuit City had difficulty communicating with the analyst community. Such issues continued to have adverse affects on the company's stock price and analyst reports.

2003 AND BEYOND

At the beginning of 2003 McCollough continued to focus on updating Circuit City's store base, streamlining operations, and polishing its consumer image. After two full years in a state of transition, the chain store seemed unable to move forward. McCollough contended that the company had made much progress over those two years, although he admitted that the company still had a long way to go before accomplishing its goals. After successfully spinning off CarMax, McCollough abandoned the smaller, mall-based Circuit City Express stores and the stand-alone appliance concept, which had never truly materialized.

McCollough's largest focus was on remodeling and redecorating Circuit City's existing stores. He expanded the home-office category, complete with personal computers, software, and accessories, and the entertainment software section, to help boost foot traffic and bring in younger consumers. However, Wall Street analysts were still unsure about the future of Circuit City, as they waited for the company to finish remodeling its store base and to announce a growth plan. Analysts felt both projects were long overdue, especially considering the opposition of Best Buy, which was far ahead in terms of the executing of a growth plan, brand positioning, and building of vendor relationships. While Circuit City had advanced several positive store prototypes, other stores remained outdated and poorly suited to the evolving consumer-electronics market.

Over the nine months ending November 30, 2003, Circuit City revenues fell 4 percent to $6.5 billion, paralleling the weak retail-sales environment caused by the general economic slowdown. Net losses from continuing operations rose 52 percent to $83.3 million, reflecting declining gross-profit margins and increased remodeling and relocation expenses. McCollough planned to move Circuit City to the next phase of its remodeling program in two hundred stores in 2004. However, the company had been on the remodeling path for some time and had yet to see improvements in returns.

See also entry on Circuit City Stores, Inc. in International Directory of Company Histories.