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.