Empty Circuit City stores will be converted into shelters to house families displaced by the credit-foreclosure crunch, the company announced today. The bankrupt electronics retailer has 36 exurban locations ideally situated for use by local families upended in the worst financial crisis to strike the United States since the depression. The company's plan also includes housing for employees that have been adversely affected by the corporation's contraction.
Monday, Circuit City filed for Chapter 11 bankruptcy protection two weeks after announcing massive layoffs and store closures.
"Frankly speaking, some of our 18,000 plus employees have had a rough time lately, they are the face of less traffic in our stores, and fierce competition from internet discounters" caretaker CEO James Markam told analysts in a conference call this morning from company headquarters in Richmond, VA. Circuit City has already laid off 1,300 workers, and is preparing to shut at least 155 stores. "We have employees that have lost everything, and we intend to help not only a few of our own, but a few dozen in the nearby neighborhoods. We've been good citizens for 59 years when times were good, that will continue as we re-establish ourselves during this particularly difficult period," he continued.
Circuit City is the largest retailer to go bankrupt since K-Mart six years ago. California department store Mervyn's also recently went belly up, as have smaller chains such as Tweeter, and Linens N Things.
More closures are expected to sweep thru the box chains. Analysts are debating who's next: PetSmart or Petco; Staples, Office Max or Office Depot; Chili's or Applebee's? Can so many chains survive in such a glum consumer market?
The businesses may disappear but what's to become of the retail buildings is indicated by Circuit City's plan. An average mid-size Circuit City location is 24,000 square feet, enough to house 64 families comfortably in two-room "cubicles," high walled living units without a ceiling, with plenty of space for common rooms, changing rooms and recreation areas. The buildings will have shower areas installed and will be rapidly transformed once empty of fixtures and merchandise.
The 36 shelter locations are scattered around the country in 22 states. All are "metro" locations in either subsidized or company owned buildings that would be difficult to immediately liquidate. "These are all properties that have very low or no rent, poor prospects for re-letting, and very low valuations. In many cases the buildings are worth a lot less than their construction cost. It makes more sense for us to operate them as shelters than let them go empty. We're seeing some shopping centers with 50% occupancy that were only built within the past five years, the businesses are gone. The retail field is experiencing a tectonic shift from the full steam ahead expectations of only a couple years ago," Markam stated.
The first shelters are expected to open in mid December, just in time for the holidays.