Dallas Star-Tribune reports on CompUSA
CompUSA is back — with an Internet-linked, in-store system that gives customers instant product information, including videos, and then allows them to compare prices charged by rivals.
The chain opened a new store in Euless in February and plans another in about a month in Arlington near Interstate 20 and Cooper Street.
It’s been a choppy ride for the 26-year-old consumer electronics retailer. Once known as Software Warehouse, it went public in 1991, acquired Tandy Corp.’s Computer City chain 12 years ago and then took over California-based The Good Guys chain in 2003.
But it struggled to make profits as fierce competition ate into margins. Not even Mexico’s renowned investor Carlos Slim — Forbes magazine’s richest man in the world — could salvage the ailing chain after investing over $3 billion.
Systemax, a publicly traded Long Island-based company that owns TigerDirect.com, an online electronics retailer, bought the CompUSA brand and 16 stores, including ones in Plano and El Paso, in early 2008 from a liquidator. Just the year before, CompUSA had operated 229 outlets nationally and employed 1,500 in North Texas alone.
By contrast, Systemax seems on a roll.
Unconventional history
Systemax was launched by two brothers in 1949 as a seller of hand trucks and carts. The three sons of one of the founders expanded what had become a catalog business, Global DirectMail, in 1986 by acquiring a firm that sold computers and computer supplies. It bought TigerDirect in 1995 months after going public, according to a company profile by business information provider Hoover’s Inc.
Despite “the worst recession of our generation,” Systemax sales grew 4 percent to $3.2 billion in its 2009 financial year, a record for the company, Chief Executive Richard Leeds told analysts last month. Same-store sales for the fourth quarter grew 12 percent while sales by its business-to-business units rose 11 percent.
At an auction last year, Systemax snapped up the brand and Internet domain names for another collapsed chain, Circuit City, for an undisclosed price. As a result, it sells computers, TVs and other goods on a number of Web sites.
Unlike Best Buy and other rivals, CompUSA does not sell appliances and offers only a few DVDs as “spontaneous buys.” It does sell video game equipment and has a very large selection of electronic accessories topped only by Fry’s, said Steve Baker, a frequent shopper at the Euless store since it opened.
“I’ll probably be here once a week, seeing what’s new,” Baker said.
Each widescreen TV on display becomes a computer monitor with its own keyboard for easy surfing. So does each display PC and laptop. Touch the keyboard and an Internet page on the item appears on the screen. Tiered displays with cameras and GPS devices share a common computer. Pick up an item, and its Internet page appears.
From that page, a shopper can navigate to any Web site to compare prices or check reviews. If a local Best Buy store offers a large-screen TV for $50 less, CompUSA will match it, said Euless store manager Chris Mora. “But 98 percent of the time, we’re going to be cheaper,” he said. There’s also a 30-day price guarantee.
Should a customer find a cheaper price from a rival Internet retailer or a wholesale club like Costco or Sam’s, matching the price is left to the store manager’s discretion.
More than a price check
“Retail 2.0 is not just a price check.” said Lonny Paul, 43, CompUSA’s director of interactive media. “The average customer can come and get as much depth [of information] as he wants.”
Paul quoted a survey that found that 72 percent of would-be buyers of electronic goods leave without making a purchase so they can go home and research the product and prices online.
All of the interactivity was lost this week on Julia Hoskins and Ivy Ashby, who were shopping the Euless store for a new PC for their company, a geophysical consulting firm. A sales clerk answered all their questions. They were going to go back to their office to price-check when a reporter alerted them to the store’s online capabilities. Unfortunately, they had narrowed their choice down to an Acer computer that was exclusive to CompUSA and could not be easily compared.
Al Meyers, a Dallas-based consultant with Retail Forward, said CompUSA has stolen a march on competitors, but wondered what “pop” in sales the technology has given the chain and whether it justified the cost.
Rival chains have tried other approaches. At the Canadian unit of Staples, known as Staples Business Depot, customers can consult “live video experts,” Meyers said. Best Buy has the Twelp Force — contact with more than 500 employees through Twitter — and its in-store Geek Squad.
CompUSA likewise has in-store consultants, which it calls TechSperts.
“It seems like a high-cost operation,” Vic Gallese, an independent retail consultant in Fort Worth, said of Retail 2.0. With deep discounting, “I don’t know how they can make any margin.”
CompUSA said the real cost of Retail 2.0 was in the software development, and there is “not a lot of money in hardware, frankly.
“There is an increase in the close rate [actual transactions], customer satisfaction, customer engagement, all those things,” a company representative said. He wouldn’t say how much it has boosted sales, only that “the amount of money is not as important as the best customer experience.”
Source: Dallas Star Telegram
