CompUSA, Falling to Competition, to Shut Down After Holidays

[Roland99]

Source: Bloomberg

Dec. 8 (Bloomberg) -- CompUSA, the computer retailer that Mexican billionaire Carlos Slim owned since 2000, will shut its doors after 23 years, succumbing to competition from Best Buy Co. and Wal-Mart Stores Inc.

Restructuring firm Gordon Brothers Group LLC bought the chain for an undisclosed sum and will sell or close its 103 stores after the U.S. holidays, CompUSA said yesterday. The 67- year-old Slim, Latin America's richest man, failed to turn around CompUSA after investing more than $1.5 billion in the chain over eight years.

``An orderly and expedited wind-down and asset sale process is the best option for CompUSA and its creditors at this juncture,'' Bill Weinstein, a principal at Gordon Brothers, said in a statement. Weinstein will serve as interim president of CompUSA.

...

CompUSA will discount items this month to get rid of inventory, Alex Stanton, spokesman for Gordon Brothers, said in an interview. He declined to comment further.

Read more: http://www.bloomberg.com/apps/news?pid=20601087&sid=aom...

[Pale Blue Dot]

1. Wow. Very sad.

I have friends in this industry, and they will NOT find jobs easily after they are let go from CompUSA. What jobs there are will be at a substantial pay cut.

[davidinalameda]

2. I made the mistake of going into a CompUSA once

I couldn't find a damn person to help me and I was looking for a new computer

I went to the Apple Store and was greeted immediately and was out of there in less than 20 minutes with a new computer

[ingac70]

3. I had a similar issue...

Except I was looking for a power supply to replace the dead one in my computer. I finally hunted one up myself, but I had asked where they were when I got there to save time, and the two folks I asked acted like they had no idea what I was talking about.

[Pale Blue Dot]

4. Here's the honest truth:

I used to be the General Manager of a Staples store. About two years ago, my district was selected for a test: we were given double the normal amount of payroll hours for our computer department. The thought was that with more service help, sales and profits would increase. The employees, including myself, were 100% behind this idea, so we pushed customer service HARD during the test.

The truth? Averaged over 4 districts across the country, there was about a 2% sales increase vs. a 40% increase in payroll. The numbers didn't add up.

In these stores, 90% of a sales clerk's life is waiting for a customer. The other 10% of the time is when EVERYONE comes in, and of that remaining 10%, 90% of that is spent dealing with 1 customer who has 1,000,000 questions and who then often leaves without buying anything.

ALSO keep in mind the following statistics. Do you know how much, on average, a tech store makes selling a laptop or a printer? Somewhere between -2 and 5% profit. On the other hand, we could sell a USB cable that cost us $1.98 for $24.99.

Please understand that I've left the industry to teach middle-schoolers, so I have no particular ax to grind anymore. I left retail partly because I think that the big-box corporate model is a disaster. I just place a ton of the blame on the average consumer, who will spend an hour with a clerk who gives him great service, and answers all his questions, only to then go across the street to a poor-service store that is selling the same laptop for $50 cheaper.

[sendero]

22. I KNEW..

... that those damned USB cables are overpriced!

Interesting story and thanks for posting it.

I've always kind of known that no retailer can really afford to handhold the customer through a tech purchase. There is simply too much to know, and lots of subjective opinions.

That is what the net is for. If you don't know what you want, or how things work together, the net is your friend!

[L0oniX]

35. Yep ,,,just like those cheap $50 printer deals but then the replacement ink cost $34.95

[sendero]

45. Exactly..

...... why I use a Canon that takes $3 cartridges I get off the net

[Alexander]

49. We sold a Lexmark at a COMPUSA I worked at that was cheaper than the ink...

The Lexmark printer cost about $42.

The ink was about $45.

It was literally cheaper to just buy a new printer than to refill the ink.

[Occulus]

57. I had a printer once

Not once- TWICE- on each one, the ink ran out, I went to buy a full color and full black ink cartridge, and found that the price was actually more expensive than buying a new printer of the same make and model, which comes with ink.

Now, granted, those starter ink cartridges are smaller or unfilled or something, but come on. You may as well call it a Bic printer.

That happened to me twice.

[jobendorfer]

65. I used to work for Xerox

Several of their office color printers are running some of my code (for better or worse )
I can tell you for a flat-out fact that I did not work for a printer company.
I worked for an ink company that made ink-dispensing units as a loss leader.

J.

[Honeycombe8]

25. The problem is with that type of thinking.

Think about the test that was performed at your company. The numbers WITH good service were compared with numbers WITHOUT good service. As if the two things are equal, and it's just about numbers, and it's just about short term numbrs.

To get even better numbers, I suppose a store could staff just one person for the whole store. Payroll costs would be way down, then. Sure, the store would lose sales, but it might come out ahead because of the ultra low payroll expense.

But the point in the first place is to provide good service, right? If that's the point, then it doesn't matter if the short term numbers go down with providing good service. What would be interesting to see is the customer ratings of the store both AFTER increased sales staff, and BEFORE it. THAT'S the most relevant thing, IMO.

Then there's the long term. If someone goes in and can't get good service, they are not likely to return to that store. If someone goes in, gets good service, but doesn't buy anything...that customer is more likely to return in the future to buy. THAT would be another statistic that your store should've run, when doing its test. Does the increased sales staff help the customers to the point that they spend more in the FUTURE in the store, even if they don't spend more immediately.

Still....when I shop at a big box discount store, I know not to expect much in the way of service. That's what keeps the prices low. If I need a high tech computer or audio setup, I'd go to a specialty store for service, and expect to pay more.

[Jeff In Milwaukee]

27. Thanks for the insight...

But my particular beef with CompUSA was not their price -- it was that their employees appeared to have been working at "The Gap" the week before. They didn't know crap.

I WILL pay more for knowledgeable sales people and service. It's unfortunate that Wal-Mart has created a Pavlovian response among consumers to "low prices" that is hard for quality retailers to overcome.

[alfredo]

40. That was why the Apple store within a store was such a good idea.

Our local CompUSA had a full time Apple employee working the Apple store. He knew the products well, and his wages were not totally dependent on sales.

[SharonAnn]

58. CompUSA cut their higher paid sales people (more experienced)

some time ago. I think a couple of years ago was when they did that cutback.

Fewer sales people, less experienced, and lower paid.

[mahatmakanejeeves]

62. Circuit City did that.

I'm not saying that only Circuit City did that. Sales fell accordingly, as possible customers, wearying of trying to get answers from inexperienced newbies, went elsewhere.

[SharonAnn]

71. CompUSA did it long before Circuit City did. Years before.

[Aviation Pro]

31. The a good business model for a store....

...would be, cheaper prices, no service (except for registaristas and security). You could name the store:

DO-YOUR-HOMEWORK,-MORONSMART^TM

[piedmont]

66. That's pretty much how I treat Bestbuy, Circuit City, etc.

I already know what I want when I walk in the door, usually. My purpose in going to the store is to physically inspect the merchandise before deciding whether to buy it or not. The sales clerk are pretty much useless to me just because I've already researched things ahead of time.

[silverojo]

6. I went to an Apple store recently

Surly, nasty staff, and just about all the crApples on display were either frozen or outright crashed. Windows looks incredibly stable in comparison! Made me decide to stick with Linux. The only thing that sucks more than a Mac computer are the snotty, completely computer illerate b*stards selling them.

[liberation]

9. And I thought Demunderground would be the last place I would have to suffer linux fanboy posts

*sigh*

Suuuure, was that experience after or while you were pulling it out of your arse?

[QC]

26. Why not? We've had to listen to the Macintologists for years here. n/t

[clixtox]

10. Somewhere Between Completely Unlikely and Total B.S.

It is very rare to have an Apple MAC computer "crash". To have crashed MACS on display in an APPLE store is never going to happen anywhere. Someone has a dull axe to grind or is "joking".

Why lie about something like this I wonder?

[ret5hd]

53. Complete and utter B.S.

(and i know my linux and i know my macs)

Any credibility this tool had with me (which was little) was just lost.

[Neverarepublican]

13. yikes

we have all mac computers and none of them have ever crashed.

[Ian David]

14. That's nice. But did you know that Linux causes penile cancer? n/t

[kedrys]

21. I find that hard to believe

Especially since the Mac OS is, er, UNIX. With a paint job.

[alfredo]

43. No, BSD with a paint job. All Apple did was make UNIX accessible to

the casual user.

[Name removed]

24. Deleted message

Message removed by moderator. Click here to review the message board rules.

[rolleitreks]

29. I don't believe you. n/t

[lanlady]

32. that store must have been infiltrated by M$ agents

The Apple stores in Pentagon City and Tyson's Corner, VA, are wonders of friendly service and efficiency. Crashed computers? Unthinkable. Sorry you had such a bad experience.

[Lorien]

44. Personally, I don't believe a word of it.

I only know of one person who ever had a Mac "crash", and he had left it on for three months straight and had used all of his old PC keystroke commands on it during that time (he had newly switched from an ancient PC to a Mac). A store with "crashed" Macs on display? It would never happen.

[slackmaster]

33. Thanks for that one, silverojo

You made my morning!

[L0oniX]

36. OpenBSD rox dude ...one of the most secure OS's out there.

I am an ex-linux user/admin but BSD is Unix based and has plenty of good open source office and desktop gui apps. BSD ...it's what you make it.

[Danger Mouse]

39. oh god, linux lovers lurking in liberal lands?

[melody]

63. Most of the liberal computer folk I know are linux fans

I wasn't aware that operating systems contained an inherent political bias.

[ryanmuegge]

67. No shit.

[Danger Mouse]

68. that little penguin is a hardcore repuke!!

[JVS]

70. Obviously a trendy corporation is more ideologically pure than a free system developed...

by the computing community

[melody]

72. No such thing as "idelogical" purity and even then it just leads to idiocy

I have my own bearings and thus can follow my own star.

[Lorien]

42. And where exactly did this take place?

I've never had anything but great experiences in an Apple store. Everything works perfectly-and 1000% better than a PC.

Once you go Mac you'll never go back!

[onehandle]

47. Bull. nt

[Tesha]

50. Bullshit. (NT)

[MUAD_DIB]

54. I'm sorry, but I don't buy that.

Apple can suck for some things but not for computers being down.

And all the Apples were crashed or frozen?

[ChairmanAgnostic]

56. the exception that proves the rule

I've been in several apple stores, all superb.

[JVS]

69. My experience is similar. The staff was not very helpful

And I was in 2 stores in 2 cities.

[Sherman A1]

8. Never had a problem with either CompUSA or Apple

Found both places provided what I needed at the time.

[silverojo]

5. That's not news

CompUSA shut its doors in Phoenix (and other parts of the country) MONTHS ago. If a chain can't survive in Phoenix, you know it's doomed.

[Sherman A1]

7. That's too bad for the folks working at the stores

and up their supply chain. I am certain that everyone needs the job they have.

[regnaD kciN]

11. The end of the "computer store"...

CompUSA was the last of the phenomenon of chains set up specifically to sell computers and software -- and only computers and software -- to average Americans. The genre began with dealers like ComputerLand and Businessland in the early days of the '80s, continued with Egghead, Micro-Computer Systems, and Ballard Computer into the '90s, and wound up with stores like Computer City (later sold to Radio Shack) and CompUSA. The latter split into two separate ownerships a couple of years back; the west coast version shut down a year or so ago, and now the east coast entity will be gone, too.

Now, if you want computers or software, you'll need to go to an office supply (Staples), home appliance (Best Buy), or department (Wal*Mart) store, where computers and, especially, software are only a minor profit stream, and thus will get correspondingly less attention and/or selection. The days, dating back from the very first years of Apple IIs, Ataris, C-64s, and the initial IBM PCs -- days where, if you wanted a computer, or something for your computer, you went to a dedicated "computer store" -- are now history. Hail and farewell.

[Pab Sungenis]

15. Another interesting thing is the variety you once had

In the 1980's, when computer stores were taking off, you had computers from Apple, Atari, Commodore, Texas Instruments, Sinclair, Tandy (although they were sold at Radio Shack), Franklin, IBM, and others. You needed a large store to stock the sheer variety of manufacturers and their dedicated peripherals and software.

Today, computer shopping has come down to two "flavors:" Mac or Windows. (Linux is still mostly an on-line, freeware phenomenon.) You need less space to sell what most people will be looking for.

[jzodda]

59. Wrong post spot

nt

[MrModerate]

12. Not to mention, buying online . . .

Which has been a major contributor to the death of many of the bricks 'n mortar stores mentioned above.

Why put up with limited selection (either generally in a CompUSA or because of brand restrictions in an Apple store) when Newegg or TigerDirect (or whatever) can offer 25 different varieties of the same type of item? Frys' bricks and mortar stores only survive because of their product range (computers, software, books, home appliances, phones, audio and video gear, etc., etc.)

[dailykoff]

52. Fry's is awesome

if you're ready for IT served fast food style. Just don't ask any questions.

[lanlady]

16. End of the Line for CompUSA

Source: San Francisco Chronicle

Consumer electronics retailer CompUSA said Friday that it will go out of business after the holidays following sale of the company to Gordon Brothers Group LLC, a restructuring firm. Financial terms weren't disclosed.

CompUSA of Dallas operates 103 stores, which plan to run store-closing sales during the holidays.

Privately held CompUSA, controlled by Mexican financier Carlos Slim Helu's Grupo Carso SA, said discussions were under way to sell certain stores in key markets. Stores that can't be sold will be closed.

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/1...

[DainBramaged]

17. They closed most of the stores last year in the Northeast anyway

Run like shit, they could not adjust to the fluidity of the marketplace and were undone by the rise in LCD saturation and demise of the Geek. They were the place to find what you needed but most of the time it wasn't worth the trip.


The on line houses have more than filled the void.

[MADem]

18. That's where the guys from the Chinese Embassy used to buy their high powered laptops in DC! nt

[PetrusMonsFormicarum]

19. Northwest stores also closed last year

and a few visits before their closing sale showed why: uneven staffing, uneven stocking, interior design that made CostCo seem like Harrod's.

Sad to see them go, though, as I am never too fond of the monopolistic choices, plus Compusa was the only Big Box that even tipped their hat to the Mac crowd.

[DFW]

20. I remember an investment "advisor" from Merrill Lynch calling me up

They were telling me to invest heavily in CompUSA as a great solid company
with great potential for growth.

Reminds me of Solomon Smith Barney telling me to get into Worldcom.

Following advice from Republican-oriented financial advisers is worse
for your financial health than putting it all in cash and hiding it under
your mattress.

[1932]

30. That's like Merrill Lynch selling Martha Stewart's ImClone shares to their less

important clients to help her get out of the stock fast.

[slampoet]

41. Good riddance. I have been asking questions for 15 yrs at CompUSA and never once got a right answer

I started out asking simple tech questions, but soon a started getting wrong answers to questions like, "How much is this computer case?" or "Where is your bathroom?"


CompUSA is the crappiest tech business ever. They are also proof that drug testing your employees can be a bad thing in some industries. What self respecting young techie would work for this corporate BS, constantly need to update their skills that could have gotten them a mid five figure job at any dot.com in the 90's, put up with the lower pay, AND put up with Drug Testing on top of that?

[mahatmakanejeeves]

23. Carlos Slim is Out $1.5 Billion?

Wow. Maybe he can get Bush to gin up a bill of attainder to bail him out for his bad investment. I'm waiting to be bailed out for my tech stocks.

The CompUSA in Alexandria VA closed last, um, February, I think. I didn't see anything at the closeout I wanted.

I feel sorry for the people who are going to be out on the streets. I remember Radio Shack's chain Computer City. I used to get a free floppy disk there once per month.

[Honeycombe8]

28. CompUSA had a bad reputation, I think. Years ago when looking for my first computer...

I went into a CompUSA. I wasn't ready to buy, and I'm glad I didn't buy there. Because later, after I had a computer, I researched buying computers on the Internet. There I found a campaign of sorts being waged against CompUSA by a disgruntled customer. Now, normally I don't pay much attention to ONE disgruntled customer. But I read his story, and it was indeed a nightmare of a story. It left me wondering about CompUSA's business practices. How they could treat a customer in that way. And at the least, how stupid were they for not simply resolving this customer's complaint instead of letting him loose on the internet to damage their reputation (it wouldn't have cost them much to replace his computer or whatever his gripe was). For one thing, because of the disgruntled customer's story, I did not buy any computer items from that store....ever. So right there it cost the company thousands of dollars, and that's just from ME. Others no doubt felt the same way.

Coupled with that customer's tale of woe were other complaints I ran across.

I'm not surprised this company is being sold. But I AM surprised it stayed in business as long as it did.

[MurrayDelph]

37. Stopped buying from them years ago

Several years ago, it was my birthday, and I needed to replace my computer.
CompUSA had two interesting things in their ad in the paper: A computer that would have met my needs at a decent price, and a No-Interest-for-a-Year card offer (which I would have paid off with time to spare before the interest kicked in).

When I got to the store, they first couldn't find the computer, and suggested I buy a slightly-more-expensive one instead.
When I started to leave, they found the "last one" they had, sold me that computer and an extra memory module.

When I got it home, that computer was defective, so the next day I took it back. Since it was the last one they had had, I took the slightly-more-expensive model. It too, turned out to be defective.

When I returned this one, I again paid a slightly-higher price to get a Sony VAIO desktop, which, as you may have guessed, turned out to be defective.

When I returned this one, the "assistant manager" insisted that it be tested first for defects (even though according to their return policy at the time, it was a recent-enough purchase that I could have returned it just because I decided the blue case clashed with the drapes in my office). While waiting for the testers, I mentioned that when I had it at home, I had trouble seeing where the memory module they had sold me went in the computer. At this, the "assistant manager" gets even huffier. He asks if I am a "Certified Sony Repair Engineer" (I am not, but I am a VMS and Linux SysAdmin, And if I were would I be paying retail from them?!), because if not, adding a memory module is violating their warranty, but if I buy their extended warranty, everything will be fine!

I pointed out to the "assistant manager," that I had been in their store every day that week, trying to buy a computer, and every day I was walking out with a little less of my money, but still did not have a computer, that there was a Best Buy and a Fry's each within two block of their store, and if, after having sold me several defective computers rather than being contrite and trying to make the loss of time up to me they saw this as an opportunity to squeeze more money out of me because they sold crap, I just wanted a complete refund, and will buy my computer elsewhere.

So, I bought it from the local business that assembles their own custom packages. I've bought three others from them since. And the last three times I set foot in that CompUSA (before they closed it), it was only to use their bathroom.

[Honeycombe8]

48. Wow. What a story. You are unbelievably patient. I wouldn't have lasted...

that long with them.

[MurrayDelph]

55. Well, I was trying to take advantage of that 0% loan,

but the other costs ended up being too high.

[melm00se]

34. from purely a business point of view

CompUSA got squeezed, not only from the big box retailers but also from the internet, the large amount of IT talent floating around from the dot com bust and outsourcing who have gone into the SMB consulting role and the fact that the low service, fulfillment model is a shrinking margin game.

Places like best buy and the like (also fulfillment models) get by via a diversified product mix (compusa was really a one trick pony) and a high level of productivity per employee.

the internet offers far lower overhead costs so a retailer (with no brick and mortar counterpart) can offer a product at a lower price (and margin) than a brick and mortar company and a hybrid (b&m with an internet outlet) is caught: they can't sell it on the web and undercut their b&m locations.

the IT folks transformed into consultants provide to the small business owner the same level of technical service, knowledge and implementation that compusa used to offer but either at a better price or a better knowledge level.

[mcscajun]

38. I saw this coming when the local CompUSA went out of business

last year after the BestBuy opened (some miles away, but still close enough to kill sales). CompUSA closed a lot of stores in the Northeast at the same time...it was just a stop-gap measure.

It's still sad, though. I prefer specialty stores where people actually know something about what they're selling.

In BestBuy's favor, though, I went to their GeekSquad to get a repair done early this year, and it was done in a hour for under $100.

[Egnever]

46. They drove themselves to destruction

Comp USA was continuously higher priced than anyone else in town where I live. I do Computer repair for a living and buy parts from all over the place. I learned very quickly that Comp USA could never touch the competitors pricing on most things. Hell even Mom and Pops places consistently undersold them.

Where I live there was a mom and pops computer store right next door to Comp USA and at first I wondered how they survived. Then i went in and compared prices walking back and forth and I could consistently get things at least $10 cheaper at the mom and pops place.

Today the comp USA is closed but the Mom and Pops place is still going strong.

When you consistently rely on customer ignorance to make your profit you are destined to fail as your customer base gets wise to your practices.

[Alexander]

51. I worked there, and was ordered by my bosses to LIE to customers.

Not surprisingly, we had a sickeningly high return rate.

My bosses demanded I push Belkin routers and adapters on people, even when they clearly didn't need them. They probably figured if even one customer kept it, it was worth it.

I walked off the job two months in and never looked back.

[jzodda]

60. Good riddence

Its a shadow of its 1990s self anyway. They no longer hire skilled workers for the most part and the workers (outside of Tech) know very little. Pay is low, retention has been low and prices are way way way overpriced. Customer service is non existent but when they first opened they had something nice going on. Too bad it didn't last.

They destroyed themselves, especially after buying computer city. They were run by terrible dumb dumbs- They would buy in bulk at some e-tailers who were already selling at a good markup and then add 40% to it in the store. Terrible prices, to the point of not being competetive. Then they would fill the isles with junk, like 40 different kinds of CD cases which are terribly low margin items. They made so many disastrous decisions its not even funny. And the owner was totally absent in Mexico. He thought he could just buy it and it would turn profit without effort, so he was hands off which hurt as well. When he bought the company was when it was most in need of real leadership, but they didn't get it.

[Orsino]

61. Low Prices generally obscure True Cost. n/t

[Bombero1956]

64. apparently

They forgot to notify the head office because there's an 8 page circular in todays paper offering the CompUSA credit card. No interest until June 2009.