How did CompUSA stumble so badly?

Fascinating to see that in the midst of CompUSA being dumped in a firesale and closed down “in an orderly fashion” over the next few weeks by liquidator Gordon Brothers Group that competitor BestBuy is reporting this to the Wall Street Journal:

“Best Buy’s quarterly profit soared 52% amid strong sales of videogame consoles, laptops and flat-panel TVs and less discounting than last holiday season. The company said its profit margin benefited from a “more rational” retail environment, especially in the home theater segment. Revenue rose 17% to $9.93 billion, thanks in part to the opening of 127 new stores. Same-store sales rose 6.7%, which included a 2.5 percentage-point gain from an extra week of post-Thanksgiving sales versus a year earlier. U.S. same-store sales climbed 6.1%.”

If you’ve been in a CompUSA recently, you’d know that they tried to sell all three of these categories of products, laptops (obviously), videogame consoles and flat-panel TVs.
First off, many congrats to the team at BestBuy for a strong retail performance this year in the extraordinarily tough consumer electronics space. This sort of report will be sure to invigorate the upcoming Consumer Electronics Show next month.
More curious though is to ask the question of why if CompUSA was indeed selling products in these apparently lucrative categories why it didn’t help the company remain profitable and in business? My take, having been there many times, is that the problem wasn’t the stock, but the employees. There are plenty of small shops with mediocre selection that do well in business because they have top-notch employees who really know their market segment and genuinely want to help (think of your local independent bookstore). CompUSA never had that and while I enjoyed seeing all the computer gear and gizmos they had, their employees, even their “Apple Center” employees, were generally clueless gits who knew far less than I did about their own product lines, and would clearly push the product with the highest margin (e.g., commission) over superior national brands like Toshiba or Dell.

8 comments on “How did CompUSA stumble so badly?

  1. I�m tired of hearing people bashing the Comp employees � let�s face it; Best Buy and CC aren�t hiring the Harvard graduates either. The exact same quality of people work in all of those stores. The problem is that CompUSA became irrelevant to their customers. Those who wanted to by a TV had to drive by three Best Buys, two Circuit Citys and five Wal-Marts to reach CompUSA. Comp did not sell enough to get top tier pricing, so to boot, they were even more expensive on the margin-rich TV products. Comp sold the heck out of all of the computer products � they gave customers a reason to pass by all of those other stores � much better selection and prices � but they were hardly profitable products. So Comp sold a lot of product that made them no money and hardly any that were profitable.

  2. This is far too simplistic a view as Best Buy isn’t much better when it comes to the quality of people. Where CompUSA failed was in a number of ways, first obviously was its branding. It was associated with “computers” and didn’t do enough to change that. Had it changed it’s name at least in a minor way “TechUSA” or something and relaunched itself that may have changed consumer thinking about the brand. It failed to update its stores and the way it merchandised. It was still “computer store” plan-o-gram looking affairs with a VERY poor shopping experience. Look at what Fry’s has done to upgrade their experience while keeping to its roots. Best Buy experimented with a store called Studio-D in Naperville, IL and learned a lot that was later rolled into it’s other stores and its new Magnolia a/v centers. CompUSA failed to differentiate itself beyond price failing until too late to look at attached services and had a BAD habit of renting space in BAD areas or strip malls with poor foot traffic. Compare this to Apple that strategically places its stores in high traffic, high value, and first tier malls. Even the CompUSA at the Carousel Mall in Syracuse NY was a clone of it’s other stores and failed to get shoppers excited.
    In all it just failed! Oh, and BTW, CompUSA never sold Dell.

  3. Comp employees were no worse than Best Buy as far as product knowledge. The guys I’ve encountered I’d say knew plenty and were true geeks. CompUSA did have dysfunctional management and it trickled down to the employees. It was all bout hitting quotas and all they could do is see if their asses were clear for the month.
    Having such short term goals just killed them by annoying the shit out of their customers by badgering them with worthless services. The company as a whole forgot about the customer only focusing on the numbers so their closing was inevitable.

  4. Jeffsters makes some good points. They couldn’t do anything right.
    Look at Apple stores. It’s not something that can be easily emulated but CompUSA was the direct opposite. No direction without a care for how customers experience their space.
    Good riddance I say.

  5. Actually, Comp did sell Dell in the mid-1990s before Dell realized that they hated retail (it ruined their just in time inventory pricing model) and they were uncompetitive with Compaq and Packard Bell. Comp also did try to make a more AppleStore-like experience, but when the stores were built, it was in the 80s when the warehouse look was in (must mean you sell so much your stores don’t look nice) and it would have cost a fortune to completely change the look and feel of the stores.

  6. “a”, yes I did. Are you going to deny that Toshiba and Dell are superior brands to the random junk that’s out there in the marketplace? I know of so many people who have had nothing but problems with their off-label knock-off computers, broken keyboards, faulty displays, flaky hard drives, etc etc., that even with the problems plaguing Dell, they’re still a solid brand and produce good products. They just need a tighter customer service feedback loop (well, among other things).

  7. For anyone who wants my two cents on CompUSA. Since they introduced commission, I haven’t shopped at the store. Last time I was there I was hounded every 30 seconds by another salesman, whom I had to attempt to brush off, so I could shop. I’m a Network Tech, so I know more than the salesmen do, so I want to be left alone when I shop there! I know what I want, I know which to buy, and I can walk 10 feet to pick it up.
    For some clueless sap that knows nothing, sure bother him all you want. I hope they make a good sale off him. But I’m done with CompUSA. I only order parts online now.

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