CompUSA store chain to soon become history

By Jacqueline Emigh, BetaNews

December 10, 2007, 2:57 PM

CompUSA, an early success story among computer retailers, will now cease to exist as a store chain by the end of this year. Meanwhile, rivals Best Buy and Circuit City only keep coming on stronger.

Although overall PC sales keep rising worldwide, US-based computer retail chain CompUSA will be shutting down all its remaining stores at the end of the December holiday season. As announced on Friday, the new owner of CompUSA, a Boston-based restructuring and investment firm known as the Gordon Brothers Group, is also looking to sell CompUSA.com, along with CompUSA's TechPro technical services business.

After finding quick success in the first several years after its founding in 1984 as software superstore Soft Warehouse, CompUSA has faced dwindling fortunes ever since the mid-1990s, due somewhat to declining PC prices but mainly to a growing inability to cope with burgeoning competition.

This competition has come forth like gangbusters on a number of fronts, from consumer electronics chains such as Best Buy and Circuit City, giant mass retailers like Wal-Mart, and international PC sales over the Web.

When the retailer changed its name, added hardware to its previously software-only line-up, and went public in 1991, CompUSA turned into the largest CE store chain in the US for a while. But during the year 2000, after CompUSA started floundering, it was taken private by a group of companies owned by Mexican billionaire Carlos Slim Helu.

Despite a string of recent industry catalysts such as Microsoft's Vista and Apple's Leopard, which have helped spurred PC sales for other retailers despite falling prices, CompUSA hasn't shown a profit since 2005. That year, its revenues amounted to $4.6 billion.

Gordon Brothers, the company that now owns CompUSA's assets, helped the company to sell more than 100 stores this past spring as part of a restructuring move.

CompUSA's 100-or-so remaining stores will sell off leftover product wares at discount prices until they, too, close down for good at the end of this year.

Although CompUSA's restructuring earlier in 2007 was aimed at streamlining operations, the store closings left CompUSA without any presence at all in a number of states in the West and Midwest, with the remaining stores clustered heavily along the Eastern seaboard. CompUSA sold both of its stores in Oregon last spring, for example.

In contrast, rivals Best Buy and Circuit City have kept expanding and innovating, both online and in the arena of brick-and-mortar stores. Circuit City, for instance, has been teaming up with Comcast on a series of boutique-style "Connect" stores, designed to encourage consumers to customize their digital homes with products and services from both companies.

On the Web, Circuit City is stepping into social networking communities, whereas CompUSA has continued to rely on older strategies such as auctioning off refurbished PCs.

What about Best Buy? Computer manufacturing giant Dell Computer -- which has traditionally followed a direct model by selling most of its PCs online -- last week named Best Buy to a list of retail sales channels that previously included only Wal-Mart and Staples.

Best Buy has also reached outside of the US by establishing a division in Canada.

Taking an international orientation -- to whatever extent practicable either online or in the brick-and-mortar world -- could be very important these days to anyone wanting to sell PCs. In the view of many analysts, more and more of the growth in the PC industry is likely to come from countries outside the US.

JP Morgan, for example, recently increased its outlook on year-on-year increases in PC sales from 11 - 12% to 13%. But in so doing, the financial analyst firm also predicted that PC sales in the Asia Pacific and the rest of the world will this year surpass PC sales in the US.