CompUSA firing on all seven cylinders - seven business areas - Company Profile

Discount Store News, May 20, 1996

As CompUSA roars toward record sales of $3.5 billion and record profits in fiscal 1996, the company is firing on all seven cylinder Those cylinders are the seven separate businesses that con tribute to its rapid growth. The are: retail, mail order, technical service and support, training, and sales to government, corporations and educational institutions.

Growth has been strong in all segments, wit mail order and training leading the way. But each has a story to tell.

Retail

One of the leading causes of CompUSA's trouble in recent years is its formerly overcrowded chronically out-of-stock retail stores. Since the new management team under chairman Jim Halpin took over in late 1993, the stores have undergone a transformation.

Halpin, coo Hal Compton and senior vp of merchandising Larry Mondrey quickly downsized departments that weren't paving their keep to make room for more productive categories. Sight lines were lowered to increase the perception of personal service (customers didn't have to search through canyons looking for sales assistance) and new concepts were tested to adapt the chain to local conditions.

Most important, the chain took steps to improve its merchandising, making the stores, in Compton's words, "more interactive and fun."

Today's CompUSA, far from the bare-bones, utilitarian and generally intimidating store of the past, is a fun place to shop. Rapidly changing theme displays offer shoppers a choice of timely, seasonally appropriate software titles. Interactive kiosks showcase the latest hits, and eight Software Sampler stations allow shoppers to sample up to 200 hot software titles. CompKids offers a separate environment where kids and parents can play, try out children's titles, then shop for kids' products in an atmosphere more like a toy store than the traditional computer store.

The company has also installed audio systems in each software aisle that promote new products found in that particular section.

Software Sampler, which will be available chain-wide by the end of June, is a quantum leap in computer retailing. In a market in which hundreds of titles are released each quarter (more than 1,700 are expected to be previewed at the upcoming E3 expo in Los Angeles), it becomes very difficult for consumers to make an intelligent choice about which games they will enjoy.

Software Sampler, with near-constant change in the titles available, allows shoppers to test-drive games and educational software before they purchase. For Compusa, this has three advantages: It increases sales; it decreases returns; and it's a revenue-gainer (software publishers pay a monthly fee for each title featured, as is the case on endcaps, themed displays, videotape monitors and audio presentations). For the publisher, Software Sampler offers a chance to stand out from the crowd, particularly during the all-important introduction period. Games in particular can be very costly to develop, and if they fail to click in the first 30 days on-shelf, that money might just as well have been burned.

"Software really has about 60 days to show sales activity," noted coo Compton. "After that, if we haven't seen it turn," back it goes.

The themed displays offer another opportunity for publishers. While just about any retailer worth its salt has used tax-time displays (and many have worked in springtime gardening displays), CompUSA changes its theme four-ways as often as every week, tying in with the topical and the seasonal. For instance, during March, one four-way featured spy titles like Activision's Spycraft: The Great Game. In April, that same display shifted to golf titles as spring finally arrived in much of the United States, and in May, to celebrate Mother's Day, cookbooks and craft titles ruled the roost.

Compton noted that these merchandising efforts lead to all-important add-on sales. "Generally, the first sale to a customer is a destination sale. They came to buy a specific product," he said. "But by theming and highlighting new releases and offering a chance to test-drive a wide selection of titles, we can create impulse buying and get that second sale."

The audio presentations have been particularly effective, he noted, because each program or tape loop is designed specifically for the aisle in which it's played. Someone in the children's educational aisle, for instance, will be open to a message about Math Blaster or Madeline, even if they only came in to buy Toy Story. The same holds true for someone looking for a tax title or Dark Forces. "They've worked so well, we even buy time for self-programming, promoting training, delivery and technical support," Compton said.

The CompKids section has also been an undiluted success, appealing as it does to women, who are as a rule intimidated by the jargon-intensive and forbidding world of computer retailing. One of the primary reasons women purchase computer products is to help with their children's development, and CompKids, with its playroom and eight pre-loaded computers, gives moms a chance to see how their kids will like a given program without the stress many feel when dealing with computer sales people.