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The Computer Buzz March 8th, 2007

Nome and Paul Van Middlesworth - owners - The Computer Fact


Another One Bites the Dust

Dallas based CompUSA is in trouble. The computer specialty chain will close more than half of its 229 retail stores this spring. All four of the North County stores, including the San Marcos store on Montiel, will be shuttered.

"Comp's" first store opened in 1985. In 1991 they annexed Tandy's "Computer City" stores. By the mid 90s "Comp" had become America's number one retailer of PCs.

In 2000 Mexican billionaire Carlos Slim, owner of Telemex, Mexico's telephone monopoly, purchased "Comp." Slim also bought "The Good Guys" seventy odd stores in 2003. By 2006 "Comp" was in serious decline and all "The Good Guys" Stores had been closed.

Comp's financial records aren't public but it’s no secret that "Comp" has not been Slim's most profitable venture. Price competition from Fry's, Best Buy, Circuit City, Staples and Office Depot squeezed "Comps" computer sales profitability. While "Comp" remained essentially a computer store, Fry's, Best Buy and Circuit City began to offer a complete line of non-computer related consumer electronics products. Today these stores typically devote less than 40% of their floor space to computer products. Most "Comp" stores simply don't have the floor space to compete with a full range of consumer electronics products.

Is "Comp" doomed? Probably yes. But they've been done in by their inability to recognize their true potential. They could be a thriving force in the PC business today if only they really understood the PC business and the assets that they possess. Here's what I would have told Carlos Slim five years ago.

"The PC business is become increasingly service oriented. The complexity and versatility of PCs and applications coupled with the decline in manufacturers quality and post sale service levels is creating a need for hands on customer support. The big box stores haven't caught on to this fact.

"Comp" has perfectly sized, strategically located facilities to fill this niche. "Comp" needs to stop trying to compete with the big box stores by selling "me too" products and the cheap "house brand" PCs that have earned "Comp" the reputation for mediocre products and less than mediocre technical and repair service."

"Comp" should start by building its own PCs on site with the emphasis on quality, reliability, performance and service. "Comp" needs to personalize its service, become a problem solver, get to know the customers and treat them as like members of the family. Concentrate on the neighborhood in which you do business. Become active in the community and set a goal to turn every home and business user within a thirty-minute drive of the store into a satisfied and loyal customer."

"Carlos, if Americans could actually purchase quality PCs that were designed, built and serviced in America by Americans in their own hometown, don't you think they would?"

Of course, Carlos Slim would probably say, "We've already tried all that and it didn't work." Then I'd get to say, "That's strange, it really works well for us!"





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