BusinessWeek is interpreting Circuit City Stores management's latest moves -- hiring an investment banker, agreeing to let dissident shareholders serve on the board, and letting Blockbuster Entertainment rummage through its books -- as a "capitulation." Blockbuster may be the only option the money-losing consumer electronics retailer has left.

Here's the problem: Circuit City was losing ground to rivals like Best Buy and Wal-Mart even before the recent economic slowdown. "Circuit City comes saddled with 682 locations, many of which are in poor and underperforming areas, a fact that CEO Philip Schoonover often refers to when discussing his company's poor performance," writes BusinessWeek. The company certainly can't count on consumers to come to the rescue. Reeling from the sub-prime mortgage disaster, excess credit card debt, soaring gasoline prices and an eroding dollar, American consumers are cutting back on retail spending, especially discretionary purchases like consumer electronics.

Retail is a bad business to be in right now.  The New York Times describes a "widening wave of bankruptcies" as thousands of stores are closing across the country. A slew of midsized retail chains have filed for bankruptcy protection: gadget seller Sharper Image, beddings retailer Linens 'n Things, furniture chain Wickes, housewares seller Fortunoff, Harvey Electronics, and catalog retailer Lillian Vernon. Even healthy firms are shutting down poor-performing stores.

Unfortunately for Schoonover and his executive team, Circuit City doesn't have many options. The Blockbuster bid -- one troubled company bidding to buy another troubled company -- hasn't inspired anyone else to get into the act.  "[There's] a lack of potential bidders beyond Blockbuster," BusinessWeek quotes Matthew Fassler, an electronics retail analyst at Goldman Sachs, as saying. When the ugly kid with acne and curly red hair is the only one who asks you to the prom, you go with the ugly kid with acne and red hair.