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business newsCompUSA: It's Baaack!
By
Scott Reeves Apr 13, 2009 2:05 pm
Bankrupt retailer takes another kick at consumer electronics can.
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Once a haven for geeks with merchandise stacked in aisles and seemingly tossed on shelves, CompUSA seeks to make itself more buyer friendly following the collapse and liquidation of rival Circuit City.
The new CompUSA allows buyers to check prices and product reviews and installation tips online before buying. The danger: Buyers may find a better deal elsewhere and buy through a competitor.
Gathering product and price information while in the store isn’t how traditional retailers such as Best Buy (BBY) do business. Typically, retailers rely on advertised prices and the chain’s reputation to draw customers. Most retailers assume customers have done their research and come to the store ready to buy.
It’s unclear that CompUSA’s decision to turn its stores into research libraries for shoppers will work. What’s certain is that the chain needs something new to attract customers after filing for bankruptcy about 2 years ago.
Gordon Brothers Group, a restructuring firm, bought CompUSA in December 2007 from Mexico’s Grupo Carso and closed many of its stores. In January 2008, Systemax (SYX) bought many of the chain’s remaining assets. It now operates about 30 stores nationwide, down from 200 or so in 2006. The remaining stores have been revamped.
The new owners apparently plan to use the CompUSA brand as a way to expand TigerDirect, an Internet retailer of computers, peripherals and consumer electronics. CompUSA’s inventory is now linked to Tiger Direct, a subsidiary of Systemax, and the divisions share the same inventory.
This is a bold -- and risky -- idea. The company wants a brick-and-mortar presence to drive sales. It may be a variation on Dell’s (DELL) decision to build stores to augment its Internet sales.
The bet: More customers, or at least a different type of customer, will buy if they can see and touch the goods before whipping out the credit card.
The risk: Prospective customers will fondle the goods at CompUSA, check prices and buy elsewhere.
Give the new owners credit for innovation and guts. If nothing else, customers will benefit from having another player in the market for computers and consumer electronics.
No positions in stocks mentioned.
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