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It's been widely reported that PC sales are transitioning fast from the standard desktop PC to the laptop PC, and retailers from Best Buy(NYSE:BBY) to Circuit City (NYSE:CC)have said the same thing -- as has operating system leader Microsoft (NASDAQ:MSFT)and PC maker Hewlett-Packard (NYSE:HPQ). All things considered, PC shipments are not really going down in a large way. But don't tell that that national computer retailer CompUSA, who said recently that it will be closing more than half of its U.S. retail locations over the next two to three months. Wow.It's pretty easy to see from many angles. CompUSA has added many other product categories in the last 18 to 24 months or so to bolster those slim margins made from many PCs (and even with laptop PCs being lower margin now). It's added plasma TV sets and more home entertainment gear to offset those PC margin declines. In fact, on a recent research trip to the retailer, it seemed more like a Best Buy than a CompUSA.
But, the margins for flat-panel TVs have deteriorated to a point where margins are now slim in that category as well, which CompUSA probably did not predict. You can't run a profitable, national consumer electronics chain with product categories that have razor-thin margins, so CompUSA --- having taken quite a while to notice this --- will slash its store count to the bone so that it can focus on top-performing stores only.
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Reader Comments (Page 1 of 1)
3-06-2007 @ 9:20PM
SMB1811 said...
The level of knowledge and servicing the customer at CompUSA had dropped significantly in the past decade and when that happens, price then becomes the greater determinant. Good business management is based on respecting the customer, respecting the sales employee and even respecting themselve. How many customers can say that a Manager ever asked if they found everything they were lookinf for or were they happy with the level of service they had received? When Managment has to resort first to the use of threats, you know that they have forgotten another basic: "You catch more flies with Honey than you do with Vinegar."
I met a former CompUSA employee working at a competitor's retail store and the first thing he said to me was he liked being treated with respect and Management actually says, "Thank You" a phrase that cost nothing, but certainly makes people feel good