April 13, 2009
CompUSA Comes Back with Retail 2.0 Strategy
By Tom Ryan
CompUSA, which was left for dead after filing
for bankruptcy in 2007, is attempting a brick & mortar comeback with
a strategy featuring steep discounts, remodeled stores, and in-store web
access for comparison-shopping. The new formula comes from its owner, Systemax,
which is attempting to marry the success of its online consumer electronics
discount subsidiary, TigerDirect, to the brick &
mortar world.
“We have invented this idea of Retail
2.0,” Systemax executive and TigerDirect founder Gilbert Fiorentino,
told Wired. “Every screen in every CompUSA store is now connected
to the internet and making buying a richer experience for customers.”
While TigerDirect has been one of the big
beneficiaries of online shopping for consumer electronics online, Mr. Fiorentino
said customers still want to go stores to buy electronics. Systemax now
has about 25 CompUSA stores, mainly located in Florida. A CompUSA website
has been in operation for awhile promising “slam dunk savings.”
According to Wired, providing in-store
web access may be the biggest risk since consumers using a CompUSA floor
model can hunt for better deals on Amazon.com. Customers are able to surf
anywhere, including checking their Facebook or Twitter accounts. Customers
can also go online to research products, owner’s manuals, reviews, product
tutorials, pictures and installation details. There’s also custom information
for that particular store, including in-stock levels of items.
“We do the same thing with laptops,
desktops and monitors,” said Mr. Fiorentino. “We are using tech
to change the retail experience for the customer and giving them access
to all the information on the internet anytime they want during the buying
process.”
According to ChannelWeb, feedback
from customers on the web has been positive, with some shoppers saying
the stores are less cluttered and better lit. But the discounts seem to
be the main appeal so far, such as a Lenovo notebook with full features
for $399.99.
Mr. Fiorentino asserted to Wired that
CompUSA can keep its prices low despite the additional overhead costs associated
with a physical store. CompUSA’s inventory is tied into TigerDirect and
the same prices are offered online as in the stores.
Doug Fleener, president of retail consulting
firm Dynamic Experiences and a RetailWire BrainTrust panelist, said
it’s unknown whether shoppers will want to research information while shopping
rather than doing it at home. But he said CompUSA can fill a void in the
marketplace if it’s able to manage the overhead involved with operating physical
stores.
“Stores like Circuit City going out
does leave an opportunity in the market,” said Mr. Fleener.
Discussion Question: What do you think of
CompUSA’s new retail 2.0 concept, especially its move to allow unrestricted
internet access throughout the store? Even with its TigerDirect connection,
do you think CompUSA will be able to compete on price against online
competition?
BrainTrust
Recent Discussions
Discussion Questions
Poll
I don’t see why this strategy would work. What works well online does not always translate well to physical stores and vice-versa. Online stores are very good for research, so trying to adapt that to stores doesn’t make much sense. Stores are better for in-person customer service, which is hard to get online. If Comp-USA wants to set itself apart, it needs to create an experience not available online, not try to emulate the web experience.
The internet access could be a draw. But as a manager, do I want people using my store as a gateway to the net? Yes, those are my customers, but I have no margin on this stuff and I have to move lots of it. People hanging around discussing the new Star Trek movie doesn’t translate to increased sales and bigger baskets (although it might if I optimize my layout to sell stuff to loiterers, a la Indigo, Borders etc). And does it impede customer service too? How long will I have to wait to try out the latest laptop while some guy emails his ‘online girlfriend’ in Niagara Falls? Apple has been very successful by allowing customers to actually use the products and see them in action.
People still need computers and parts so the spoils will go to the chain that offers excellent service and excellent value (shocking, I know). On the surface, CompUSA looks like they may have something here. I may have to trek down to Ft. Lauderdale and give it the ol’ Captus once over.
We love TigerDirect in Canada so if that value can filter down to Comp, there could be an opportunity for them in the Great White North (considering we just got internet a week ago).
Why didn’t they name the stores TigerDirect? Comp USA has a horrible reputation with consumers. Frequent out of stocks, non-competitive prices and poor customer service drove them out of business. Yes, consumers will recognize the Comp USA name, but will they get over the negative reputation?
CompUSA might be relying too much on “price” to win with consumers, and that’s always a volatile proposition. If CompUSA will give more emphasis to service, consumer assistance, expertise, etc., while offering a very competitive price; I believe there might still be a market for what they do. No retail chain is doing a great job at present selling consumers who are not technical geeks. Best Buy comes closest.
Not sure that I understand how they can make themselves more value added by just giving customers internet access. I would think any tech savvy customer is either going to have the information already or just walk with an iPhone and look it up. If they are really serious about changing the experience then maybe look at a hybrid of a number of concepts. Why not have a coffee bar with internet access with accessories for sale to enhance the experience, office environments set up where you can try out platforms of Vista verses Mac verses Windows 7.0 with three or four printers, chairs and desks that I may or can buy as a mix and match package?
If they are going to really be 2.0 they really need to add value to the shopping experience.
Here’s the money quote: “Consumers are looking for alternative places to go and the thrill of walking into a store and looking at products is not easily replaceable for shoppers.”
As I have been saying for 8 years, multi-channel, then merged-channel is how the best, most successful retailers operate today and will in the future.
Shopping from home before buying is now the rule, but consumers will gladly visit physical stores for the total experience. They will be able to access in-store Internet terminals for comparison shopping, but this is an advantage to the store in which they are standing. I see this as expanding visits, sales, profits, and growth (and raising the stock price).
I admit I have not seen or shopped in one of CompUSA’s new stores, but just having gone through a small tech purchase (a new 24″ monitor)I would have welcomed a store that allowed me to do my research and see and touch the items I was resarching. That said, the issue would have been whether any of the monitors in the store met my needs or would I have had to order it from TigerDirect or another online retailer?
I agree with Max…reviving the business under the existing name is a mistake. You might as well name it Circuit City 2.0 for all the negative connotations. And making price the key competitive difference is also a questionable decision…there is always somebody (Walmart, anyone?) willing to be the low price leader in every category in which it competes, including consumer electronics. Since Walmart already “owns” price and Best Buy “owns” customer service, maybe it’s smarter for Comp USA 2.0 to stake out a different competitive position altogether, such as providing the easiest shopping experience in the segment.
There is a possibility that this would work. As long as they don’t go the route of Circuit City and fire everyone who had any domain knowledge. When people buy electronics they want advice – experts that can direct them to the best functionality and tell them how it should be applied and what the benefit of one function over another will give them. If they add the knowledgeable employee to the mix, they may have a winner and true competitor of Best Buy.
I have always been a big fan of being able to see and touch a product before buying it. And even though online shopping is easy and convenient, if the traditional method can deliver a more positive buying experience, then why not?
I wish them luck. Regardless of the formula, times are tough. I think the real key to their success is slow and careful growth.
It is really disconcerting to see people comment who have not visited the stores. What CompUSA is doing is very interesting. It is not clear it will work, nor that it is scalable. On the other hand, some fusion of internet and brick and mortar are inevitable so kudos to all who try as some formula will be found.
As noted, a very large percentage of the US visually oriented population must have contact with a product to close the purchase cycle. However, online pricing is also a disruptive factor and so Systemax is trying to resolve it. Efforts like this are important especially for more considered purchases like CE.
I have visited the stores and it seems to be working and exciting shoppers for now. It will take time to see if it holds up, if it can be maintained (which is a big issue here) and if it can be scaled. Take a look and then decide.
I don’t see how this would work. You are taking the costs of brick and mortar and incorporating a low profit internet element. I just don’t think it is viable.
CompUSA is facing a significant uphill challenge. While internet connectivity may serve as somewhat of an in-store differentiator, consumers ultimately prefer to comparison shop in the comfort of their home or office. Competing primarily on price is always a risk, as others with larger scale and retail footprints can do the same and erode CompUSA’s margins. Finally, I agree with Max’s remark — if CompUSA truly wants to be seen as “retail 2.0”, they should have adopted the TigerDirect name and given themselves a fresh start.
I wish that there was a store close by that I could check for myself. This sounds to me like a very smart decision that could be a big winner for them. I too love to shop online at home but prefer to buy at a store where I can see and feel the product. Being able to check online and see and feel at the same time sounds like a winner to me.
I’d have named it TigerDirect. Tiger has long been the go-to purveyor of computer gear for geeks; providing Tiger with a showroom makes lots of sense. Tiger’s extensive selection could pose viable competition to Best Buy.
I don’t think there is anyone who really thinks this strategy will work. If you base your entire strategy on price, it is doomed to failure. There is always someone who will be willing to sell the same product cheaper. To think that people want to stand at a computer, log on to see whether or not Amazon is less expensive, and then try and get the CompUSA manager to lower the price, is an indication that the executives at CompUSA don’t understand the minds of the consumer.
There is a reason that Circuit City failed. We didn’t need Circuit City when Best Buy meets the customer’s needs. The same holds true for CompUSA, no matter what the savings. And how does CompUSA think it is going to beat the service of CDW? This is a waste of money, and 6 months from now we will all be providing our commentary as to why the CompUSA strategy didn’t work.
If I were to design today’s and tomorrow’s retail concept, this is what I would design. The idea that brick and mortar will be the only face of a retailer to the consumer in the future is signing a death warrant in the long term. It may be as few as five years or so away that consumers will receive the bulk of their information online. Those retailers that recognize this will succeed. Those retailers that recognize this will attain high top of mind awareness and ultimately high market share.
The discussion notes; “According to Wired, providing in-store web access may be the biggest risk since consumers using a CompUSA floor model can hunt for better deals on Amazon.com. Customers are able to surf anywhere, including checking their Facebook or Twitter accounts. Customers can also go online to research products, owner’s manuals, reviews, product tutorials, pictures and installation details. There’s also custom information for that particular store, including in-stock levels of items.” Isn’t that exactly what we want our customers to do? Don’t we want them to make the best purchase decision? I do not believe the retailer’s objective should be to limit the information the customer has or can get. If a retailer is afraid of information the customer might be able to access in their store or out, maybe they have a problem they should resolve. How quickly could that problem be resolved when the customer points out why they are purchasing something through Amazon right there at the store?
I absolutely love this. Getting up off the mat and continuing to fight. The comments regarding the appropriate naming and business model from folks who’ve never resurrected a bidness might have some limited cocktail party value, but should be summarily discounted. Rolled-up sleeves will rule this comeback effort, rather than ivory tower suppositions. I see rolled-up sleeves. How about you?
I was actually in a store in South Florida and the help was quite good. They were presentable, engaging, and quite helpful…of course nothing like the CompUSA of before.
In regard to the name, I think the CompUSA name gives them instant brand recognition where the TigerDirect name wouldn’t. I think early adopters did have a lot of poor experiences with the original CompUSA, but there are a lot of consumers who didn’t or those who will give them a second chance.
While I’m sure the return of CompUSA isn’t keeping the Best Buy execs awake at night, there is room for another brick and mortar consumer electronics store. And give them credit; they are trying to differentiate their in-store experience.
It all depends on their execution. If this increases my knowledge and improves my in-store experience, then it can be a good approach. If it is not going to help me accomplish these 2 things, then who cares?
I was stunned when I heard this. Having said that, the market has more cheap big box space available so finding new locations should be easy.
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I don’t see why this strategy would work. What works well online does not always translate well to physical stores and vice-versa. Online stores are very good for research, so trying to adapt that to stores doesn’t make much sense. Stores are better for in-person customer service, which is hard to get online. If Comp-USA wants to set itself apart, it needs to create an experience not available online, not try to emulate the web experience.
The internet access could be a draw. But as a manager, do I want people using my store as a gateway to the net? Yes, those are my customers, but I have no margin on this stuff and I have to move lots of it. People hanging around discussing the new Star Trek movie doesn’t translate to increased sales and bigger baskets (although it might if I optimize my layout to sell stuff to loiterers, a la Indigo, Borders etc). And does it impede customer service too? How long will I have to wait to try out the latest laptop while some guy emails his ‘online girlfriend’ in Niagara Falls? Apple has been very successful by allowing customers to actually use the products and see them in action.
People still need computers and parts so the spoils will go to the chain that offers excellent service and excellent value (shocking, I know). On the surface, CompUSA looks like they may have something here. I may have to trek down to Ft. Lauderdale and give it the ol’ Captus once over.
We love TigerDirect in Canada so if that value can filter down to Comp, there could be an opportunity for them in the Great White North (considering we just got internet a week ago).
Why didn’t they name the stores TigerDirect? Comp USA has a horrible reputation with consumers. Frequent out of stocks, non-competitive prices and poor customer service drove them out of business. Yes, consumers will recognize the Comp USA name, but will they get over the negative reputation?
CompUSA might be relying too much on “price” to win with consumers, and that’s always a volatile proposition. If CompUSA will give more emphasis to service, consumer assistance, expertise, etc., while offering a very competitive price; I believe there might still be a market for what they do. No retail chain is doing a great job at present selling consumers who are not technical geeks. Best Buy comes closest.
Not sure that I understand how they can make themselves more value added by just giving customers internet access. I would think any tech savvy customer is either going to have the information already or just walk with an iPhone and look it up. If they are really serious about changing the experience then maybe look at a hybrid of a number of concepts. Why not have a coffee bar with internet access with accessories for sale to enhance the experience, office environments set up where you can try out platforms of Vista verses Mac verses Windows 7.0 with three or four printers, chairs and desks that I may or can buy as a mix and match package?
If they are going to really be 2.0 they really need to add value to the shopping experience.
Here’s the money quote: “Consumers are looking for alternative places to go and the thrill of walking into a store and looking at products is not easily replaceable for shoppers.”
As I have been saying for 8 years, multi-channel, then merged-channel is how the best, most successful retailers operate today and will in the future.
Shopping from home before buying is now the rule, but consumers will gladly visit physical stores for the total experience. They will be able to access in-store Internet terminals for comparison shopping, but this is an advantage to the store in which they are standing. I see this as expanding visits, sales, profits, and growth (and raising the stock price).
I admit I have not seen or shopped in one of CompUSA’s new stores, but just having gone through a small tech purchase (a new 24″ monitor)I would have welcomed a store that allowed me to do my research and see and touch the items I was resarching. That said, the issue would have been whether any of the monitors in the store met my needs or would I have had to order it from TigerDirect or another online retailer?
I agree with Max…reviving the business under the existing name is a mistake. You might as well name it Circuit City 2.0 for all the negative connotations. And making price the key competitive difference is also a questionable decision…there is always somebody (Walmart, anyone?) willing to be the low price leader in every category in which it competes, including consumer electronics. Since Walmart already “owns” price and Best Buy “owns” customer service, maybe it’s smarter for Comp USA 2.0 to stake out a different competitive position altogether, such as providing the easiest shopping experience in the segment.
There is a possibility that this would work. As long as they don’t go the route of Circuit City and fire everyone who had any domain knowledge. When people buy electronics they want advice – experts that can direct them to the best functionality and tell them how it should be applied and what the benefit of one function over another will give them. If they add the knowledgeable employee to the mix, they may have a winner and true competitor of Best Buy.
I have always been a big fan of being able to see and touch a product before buying it. And even though online shopping is easy and convenient, if the traditional method can deliver a more positive buying experience, then why not?
I wish them luck. Regardless of the formula, times are tough. I think the real key to their success is slow and careful growth.
It is really disconcerting to see people comment who have not visited the stores. What CompUSA is doing is very interesting. It is not clear it will work, nor that it is scalable. On the other hand, some fusion of internet and brick and mortar are inevitable so kudos to all who try as some formula will be found.
As noted, a very large percentage of the US visually oriented population must have contact with a product to close the purchase cycle. However, online pricing is also a disruptive factor and so Systemax is trying to resolve it. Efforts like this are important especially for more considered purchases like CE.
I have visited the stores and it seems to be working and exciting shoppers for now. It will take time to see if it holds up, if it can be maintained (which is a big issue here) and if it can be scaled. Take a look and then decide.
I don’t see how this would work. You are taking the costs of brick and mortar and incorporating a low profit internet element. I just don’t think it is viable.
CompUSA is facing a significant uphill challenge. While internet connectivity may serve as somewhat of an in-store differentiator, consumers ultimately prefer to comparison shop in the comfort of their home or office. Competing primarily on price is always a risk, as others with larger scale and retail footprints can do the same and erode CompUSA’s margins. Finally, I agree with Max’s remark — if CompUSA truly wants to be seen as “retail 2.0”, they should have adopted the TigerDirect name and given themselves a fresh start.
I wish that there was a store close by that I could check for myself. This sounds to me like a very smart decision that could be a big winner for them. I too love to shop online at home but prefer to buy at a store where I can see and feel the product. Being able to check online and see and feel at the same time sounds like a winner to me.
I’d have named it TigerDirect. Tiger has long been the go-to purveyor of computer gear for geeks; providing Tiger with a showroom makes lots of sense. Tiger’s extensive selection could pose viable competition to Best Buy.
I don’t think there is anyone who really thinks this strategy will work. If you base your entire strategy on price, it is doomed to failure. There is always someone who will be willing to sell the same product cheaper. To think that people want to stand at a computer, log on to see whether or not Amazon is less expensive, and then try and get the CompUSA manager to lower the price, is an indication that the executives at CompUSA don’t understand the minds of the consumer.
There is a reason that Circuit City failed. We didn’t need Circuit City when Best Buy meets the customer’s needs. The same holds true for CompUSA, no matter what the savings. And how does CompUSA think it is going to beat the service of CDW? This is a waste of money, and 6 months from now we will all be providing our commentary as to why the CompUSA strategy didn’t work.
If I were to design today’s and tomorrow’s retail concept, this is what I would design. The idea that brick and mortar will be the only face of a retailer to the consumer in the future is signing a death warrant in the long term. It may be as few as five years or so away that consumers will receive the bulk of their information online. Those retailers that recognize this will succeed. Those retailers that recognize this will attain high top of mind awareness and ultimately high market share.
The discussion notes; “According to Wired, providing in-store web access may be the biggest risk since consumers using a CompUSA floor model can hunt for better deals on Amazon.com. Customers are able to surf anywhere, including checking their Facebook or Twitter accounts. Customers can also go online to research products, owner’s manuals, reviews, product tutorials, pictures and installation details. There’s also custom information for that particular store, including in-stock levels of items.” Isn’t that exactly what we want our customers to do? Don’t we want them to make the best purchase decision? I do not believe the retailer’s objective should be to limit the information the customer has or can get. If a retailer is afraid of information the customer might be able to access in their store or out, maybe they have a problem they should resolve. How quickly could that problem be resolved when the customer points out why they are purchasing something through Amazon right there at the store?
I absolutely love this. Getting up off the mat and continuing to fight. The comments regarding the appropriate naming and business model from folks who’ve never resurrected a bidness might have some limited cocktail party value, but should be summarily discounted. Rolled-up sleeves will rule this comeback effort, rather than ivory tower suppositions. I see rolled-up sleeves. How about you?
I was actually in a store in South Florida and the help was quite good. They were presentable, engaging, and quite helpful…of course nothing like the CompUSA of before.
In regard to the name, I think the CompUSA name gives them instant brand recognition where the TigerDirect name wouldn’t. I think early adopters did have a lot of poor experiences with the original CompUSA, but there are a lot of consumers who didn’t or those who will give them a second chance.
While I’m sure the return of CompUSA isn’t keeping the Best Buy execs awake at night, there is room for another brick and mortar consumer electronics store. And give them credit; they are trying to differentiate their in-store experience.
It all depends on their execution. If this increases my knowledge and improves my in-store experience, then it can be a good approach. If it is not going to help me accomplish these 2 things, then who cares?
I was stunned when I heard this. Having said that, the market has more cheap big box space available so finding new locations should be easy.