CompUSA says goodbye to Good Guys; will close all doors

DSN Retailing Today, Oct 24, 2005 by Doug Desjardins

DALLAS -- After years of declining sales, The Good Guys consumer electronics chain is saying goodbye. Parent company CompUSA abruptly dosed 11 Good Guys stores Oct. 4 and plans to shutter the remaining 35 in the next two months.

The closing ends a two-year attempt by CompUSA to revive the chain, which it acquired in October 2003 for $55 million. But stiff competition from larger rivals like Best Buy and a waning demand for high-end merchandise and hands-on service sealed its fate.

"The concept of a stand-alone retailer that specializes in high-end home entertainment is hard to work in today's marketplace," said CompUSA spokesperson Clara Miller. "Consumers want a one-stop shopping destination with a greater variety of product."

CompUSA plans to stay in the home entertainment sector, though. On the same day it announced the closing of Good Guys, it expanded its selection of high-end home entertainment products in 38 CompUSA stores in California and Hawaii. And it plans to retain the Good Guys brand name in some home entertainment sections. "So, in that sense, the Good Guys name will live on," said Miller.

CompUSA tried to revive Good Guys this summer when it converted 17 locations into CompUSA/Good Guys Megastores, which combined the best elements of both chains under one roof. But it wasn't enough, as evidenced by the fact that 5 of the 11 stores that it closed Oct. 4 were Megastores. The 12 remaining Megastores will become CompUSA stores.

Good Guys started as a single store in San Francisco, went public in 1986 and boomed in the late 1980s and 1990s until larger chains like Best Buy moved into its West Coast markets and whittled away its base. From 1997 to 2003, Good Guys had only one profitable year when it netted $1.1 million in fiscal 2003. In the six months leading up to its acquisition, Good Guys reported a net loss of $15.3 million. The chain was operating 71 stores in California, Oregon, Nevada and Washington at the time it was purchased.

The demise of Good Guys could be a bellwether for other regional chains that are under heavy pressure from larger rivals and mass merchants.

Ultimate Electronics filed for Chapter 11 bankruptcy in January and was on the brink of liquidation when Hollywood Video founder Mark Wattles bought its remaining 32 stores. And Tweeter Entertainment closed 19 stores this year and is in the process of trying to turn around business at its remaining 160 stores.

"The scenario is bleak for regional electronics chains," said George Whalin, president of Retail Management Consultants in San Marcos, Calif. "Going up against the likes of Best Buy and Circuit City is just too tough for somebody in the middle."